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) -- Monarch Financial Holdings (Nasdaq: MNRK) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and attractive valuation levels. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.
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- The revenue growth came in higher than the industry average of 11.0%. Since the same quarter one year prior, revenues rose by 34.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 93.00% and other important driving factors, this stock has surged by 45.46% 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.
- The gross profit margin for MONARCH FINANCIAL HLDGS INC is currently very high, coming in at 94.40%. 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 10.03% trails the industry average.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, MONARCH FINANCIAL HLDGS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- MONARCH FINANCIAL HLDGS INC 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, MONARCH FINANCIAL HLDGS INC increased its bottom line by earning $1.26 versus $0.69 in the prior year. For the next year, the market is expecting a contraction of 17.6% in earnings ($1.04 versus $1.26).
-- Written by a member of TheStreet Ratings Staff