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) -- Hancock Holding Company (Nasdaq: HBHC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
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- HANCOCK HOLDING CO 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HANCOCK HOLDING CO increased its bottom line by earning $1.76 versus $1.21 in the prior year. This year, the market expects an improvement in earnings ($2.46 versus $1.76).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 162.6% when compared to the same quarter one year prior, rising from $18.50 million to $48.58 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Commercial Banks industry and the overall market, HANCOCK HOLDING CO's return on equity is below that of both the industry average and the S&P 500.
- HBHC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 26.27%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, HBHC is still more expensive than most of the other companies in its industry.
-- Written by a member of TheStreet Ratings Staff