Macro Bank Inc. Stock Downgraded (BMA)

NEW YORK ( TheStreet) -- Macro Bank (NYSE: BMA) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and attractive valuation levels. 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:
  • The revenue growth greatly exceeded the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 27.7%. Growth in the company's revenue appears to have helped boost the 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. Compared to other companies in the Commercial Banks industry and the overall market, BANCO MACRO SA's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Commercial Banks industry average. The net income increased by 11.0% when compared to the same quarter one year prior, going from $68.96 million to $76.51 million.
  • BMA's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 57.07%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Net operating cash flow has significantly decreased to -$70.40 million or 153.68% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
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Banco Macro S.A. provides banking products and services to individuals, entrepreneurs, companies, and corporate customers in Argentina. The company has a P/E ratio of 0.7, below the average banking industry P/E ratio of 3.2 and below the S&P 500 P/E ratio of 17.7. Macro has a market cap of $865.6 million and is part of the financial sector and banking industry. Shares are down 24.1% year to date as of the close of trading on Tuesday.

You can view the full Macro Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet Ratings Staff
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