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) -- HFF (NYSE: HF) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- HF's revenue growth trails the industry average of 26.2%. Since the same quarter one year prior, revenues slightly increased by 8.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Capital Markets industry and the overall market, HFF INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- HFF INC's earnings per share declined by 6.9% 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, HFF INC increased its bottom line by earning $1.10 versus $0.37 in the prior year. For the next year, the market is expecting a contraction of 8.2% in earnings ($1.01 versus $1.10).
- Net operating cash flow has significantly decreased to $4.01 million or 70.55% when compared to the same quarter last year. Despite a decrease in cash flow of 70.55%, HFF INC is still significantly exceeding the industry average of -275.50%.
-- Written by a member of TheStreet Ratings Staff