Capitol Federal Financial Inc. Stock Downgraded (CFFN)

NEW YORK ( TheStreet) -- Capitol Federal Financial (Nasdaq: CFFN) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, impressive record of earnings per share growth and notable return on equity. However, as a counter to these strengths, we find that the stock has had a decline in price during the past year.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 66.47% to $21.77 million when compared to the same quarter last year. In addition, CAPITOL FEDERAL FINL INC has also vastly surpassed the industry average cash flow growth rate of -15.32%.
  • 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, CAPITOL FEDERAL FINL INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Thrifts & Mortgage Finance industry average, but is greater than that of the S&P 500. The net income increased by 23.5% when compared to the same quarter one year prior, going from $15.64 million to $19.32 million.
  • After a year of stock price fluctuations, the net result is that CFFN's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
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Capitol Federal Financial, Inc. is the bank holding company for Capitol Federal Savings Bank through which it provides commercial banking products and services. The company has a P/E ratio of 26.4, equal to the average banking industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Capitol Federal Financial has a market cap of $1.95 billion and is part of the financial sector and banking industry. Shares are up 2.8% year to date as of the close of trading on Monday.

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