Peoples Federal Bancshares Inc. Stock Downgraded (PEOP)

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) -- Peoples Federal (Nasdaq: PEOP) 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 and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

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Highlights from the ratings report include:
  • The gross profit margin for PEOPLES FEDERAL BANCSHS INC is currently very high, coming in at 84.00%. 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 12.34% trails the industry average.
  • PEOP, with its decline in revenue, slightly underperformed the industry average of 5.8%. Since the same quarter one year prior, revenues slightly dropped by 1.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • 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. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market on the basis of return on equity, PEOPLES FEDERAL BANCSHS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has significantly decreased to -$0.19 million or 109.93% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
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Peoples Federal Bancshares, Inc. operates as a holding company for Peoples Federal Savings Bank that provides financial services to individuals and small businesses. The company has a P/E ratio of 74.5, above the S&P 500 P/E ratio of 17.7. Peoples Federal has a market cap of $118.1 million and is part of the financial sector and banking industry. Shares are up 2.4% year to date as of the close of trading on Tuesday.

You can view the full Peoples Federal Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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