NEW YORK ( TheStreet) -- Centerstate Banks of Florida (Nasdaq: CSFL) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- CENTERSTATE BANKS INC reported significant earnings per share improvement 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CENTERSTATE BANKS INC continued to lose money by earning -$0.19 versus -$0.39 in the prior year. This year, the market expects an improvement in earnings ($0.32 versus -$0.19).
- The gross profit margin for CENTERSTATE BANKS INC is currently very high, coming in at 75.40%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -6.20% is in-line with the industry average.
- CSFL, with its decline in revenue, slightly underperformed the industry average of 2.6%. Since the same quarter one year prior, revenues slightly dropped by 7.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- CSFL has underperformed the S&P 500 Index, declining 6.54% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Net operating cash flow has declined marginally to $13.64 million or 5.46% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.