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) -- First Federal Bancshares of Arkansas (Nasdaq: FFBH) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow.
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- Powered by its strong earnings growth of 118.18% and other important driving factors, this stock has surged by 65.36% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- FIRST FEDERAL BANCSHARES/AR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, FIRST FEDERAL BANCSHARES/AR continued to lose money by earning -$1.87 versus -$5.05 in the prior year.
- The gross profit margin for FIRST FEDERAL BANCSHARES/AR is currently very high, coming in at 83.00%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, FFBH's net profit margin of 5.60% significantly trails the industry average.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, FIRST FEDERAL BANCSHARES/AR's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to -$0.78 million or 11.15% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
-- Written by a member of TheStreet Ratings Staff