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) -- American River Bankshares (Nasdaq: AMRB) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins, solid stock price performance and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.
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- The gross profit margin for AMERICAN RIVER BANKSHARES is currently very high, coming in at 85.40%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, AMRB's net profit margin of 12.90% significantly trails the industry average.
- Compared to its closing price of one year ago, AMRB's share price has jumped by 42.70%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Commercial Banks industry. The net income has significantly decreased by 25.6% when compared to the same quarter one year ago, falling from $1.05 million to $0.78 million.
- Net operating cash flow has decreased to $1.21 million or 34.61% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
-- Written by a member of TheStreet Ratings Staff