Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- North Valley Bancorp (Nasdaq: NOVB) 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, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- The gross profit margin for NORTH VALLEY BANCORP is currently very high, coming in at 96.54%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.68% trails the industry average.
- Compared to its closing price of one year ago, NOVB's share price has jumped by 29.39%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- NOVB, with its decline in revenue, slightly underperformed the industry average of 2.4%. Since the same quarter one year prior, revenues fell by 11.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing 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. When compared to other companies in the Commercial Banks industry and the overall market, NORTH VALLEY BANCORP's return on equity is below that of both the industry average and the S&P 500.
- NORTH VALLEY BANCORP's earnings per share declined by 27.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, NORTH VALLEY BANCORP increased its bottom line by earning $0.92 versus $0.45 in the prior year. For the next year, the market is expecting a contraction of 11.4% in earnings ($0.82 versus $0.92).