NEW YORK ( TheStreet) -- City National (NYSE: CYN) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, expanding profit margins, good cash flow from operations, notable return on equity and compelling growth in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- CITY NATIONAL CORP has improved earnings per share by 18.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CITY NATIONAL CORP increased its bottom line by earning $2.36 versus $0.49 in the prior year. This year, the market expects an improvement in earnings ($3.22 versus $2.36).
- The gross profit margin for CITY NATIONAL CORP is currently very high, coming in at 89.50%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CYN's net profit margin of 14.40% significantly trails the industry average.
- Net operating cash flow has increased to $146.16 million or 24.43% when compared to the same quarter last year. Despite an increase in cash flow of 24.43%, CITY NATIONAL CORP is still growing at a significantly lower rate than the industry average of 186.80%.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.4%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Commercial Banks industry and the overall market, CITY NATIONAL CORP's return on equity is below that of both the industry average and the S&P 500.