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) -- Bank Mutual Corporation (Nasdaq: BKMU) 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, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.
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- BANK MUTUAL CORP 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, BANK MUTUAL CORP turned its bottom line around by earning $0.15 versus -$1.04 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus $0.15).
- The gross profit margin for BANK MUTUAL CORP is currently very high, coming in at 80.84%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, BKMU's net profit margin of 9.94% significantly trails the industry average.
- Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 39.44% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- 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 99.3% when compared to the same quarter one year prior, rising from $1.33 million to $2.65 million.
- Net operating cash flow has decreased to $14.51 million or 28.42% when compared to the same quarter last year. Despite a decrease in cash flow of 28.42%, BANK MUTUAL CORP is still significantly exceeding the industry average of -324.29%.