NEW YORK ( TheStreet) -- Beacon Federal Bancorp (Nasdaq: BFED) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including poor profit margins, unimpressive growth in net income and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- Net operating cash flow has increased to $6.47 million or 45.95% when compared to the same quarter last year. In addition, BEACON FEDERAL BANCORP INC has also vastly surpassed the industry average cash flow growth rate of -53.79%.
- 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. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market on the basis of return on equity, BEACON FEDERAL BANCORP INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The share price of BEACON FEDERAL BANCORP INC has not done very well: it is down 6.25% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
- The gross profit margin for BEACON FEDERAL BANCORP INC is rather low; currently it is at 21.00%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 5.60% trails that of the industry average.
-- Written by a member of TheStreet Ratings Staff