Peoples Federal Bancshares Inc. Stock Upgraded (PEOP)

NEW YORK ( TheStreet) -- Peoples Federal (Nasdaq: PEOP) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, notable return on equity and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The gross profit margin for PEOPLES FEDERAL BANCSHS INC is currently very high, coming in at 82.50%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 10.80% trails the industry average.
  • 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, PEOPLES FEDERAL BANCSHS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Despite the weak revenue results, PEOP has outperformed against the industry average of 20.0%. Since the same quarter one year prior, revenues slightly dropped by 2.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • PEOPLES FEDERAL BANCSHS INC's earnings per share declined by 25.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PEOPLES FEDERAL BANCSHS INC turned its bottom line around by earning $0.47 versus -$0.28 in the prior year. For the next year, the market is expecting a contraction of 27.6% in earnings ($0.34 versus $0.47).

Peoples Federal Bancshares, Inc. operates as a holding company for Peoples Federal Savings Bank that provides financial services to individuals and small businesses. The company has a P/E ratio of 40, equal to the average banking industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Peoples Federal has a market cap of $116.7 million and is part of the financial sector and banking industry. Shares are up 17.5% year to date as of the close of trading on Monday.

You can view the full Peoples Federal Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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