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) -- First Financial Northwest (Nasdaq: FFNW) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, increase in stock price during the past year, notable return on equity and increase in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
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- The gross profit margin for FIRST FINANCIAL NORTHWEST is currently very high, coming in at 77.70%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, FFNW's net profit margin of 16.13% significantly trails the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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. We feel, however, that the other strengths this company displays justify these higher price levels.
- The revenue fell significantly faster than the industry average of 41.3%. Since the same quarter one year prior, revenues fell by 15.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- 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. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market on the basis of return on equity, FIRST FINANCIAL NORTHWEST underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Thrifts & Mortgage Finance industry average, but is greater than that of the S&P 500. The net income increased by 150.2% when compared to the same quarter one year prior, rising from $0.62 million to $1.56 million.
-- Written by a member of TheStreet Ratings Staff