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) -- HMN Financial (Nasdaq: HMNF) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and weak operating cash flow.
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- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income has significantly decreased by 73.6% when compared to the same quarter one year ago, falling from $2.80 million to $0.74 million.
- Net operating cash flow has significantly decreased to $1.99 million or 70.15% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market on the basis of return on equity, HMN FINANCIAL INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The revenue fell significantly faster than the industry average of 40.0%. Since the same quarter one year prior, revenues fell by 21.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- HMN FINANCIAL INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, HMN FINANCIAL INC turned its bottom line around by earning $0.85 versus -$3.46 in the prior year.
-- Written by a member of TheStreet Ratings Staff