Editor's Note: 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. NEW YORK ( TheStreet) -- National Penn (Nasdaq: NPBC) 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, good cash flow from operations, 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.
- ACTIVE STOCK TRADERS: Get full access to Jim Cramer's thoughts for less than $3/week - sometimes before he says them on TV! Start with a 14-Day Free Trial.
- The gross profit margin for NATIONAL PENN BANCSHARES INC is currently very high, coming in at 81.40%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.40% is above that of the industry average.
- NATIONAL PENN BANCSHARES INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NATIONAL PENN BANCSHARES INC increased its bottom line by earning $0.55 versus $0.11 in the prior year. This year, the market expects an improvement in earnings ($0.63 versus $0.55).
- Net operating cash flow has slightly increased to $41.36 million or 2.00% when compared to the same quarter last year. Despite an increase in cash flow, NATIONAL PENN BANCSHARES INC's average is still marginally south of the industry average growth rate of 10.52%.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 16.2%. Since the same quarter one year prior, revenues slightly dropped by 8.9%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable 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. When compared to other companies in the Commercial Banks industry and the overall market, NATIONAL PENN BANCSHARES INC's return on equity is below that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff