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) -- TFS Financial Corporation (Nasdaq: TFSL) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, good cash flow from operations, expanding profit margins, solid stock price performance and notable return on equity. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income increased by 1721.4% when compared to the same quarter one year prior, rising from $0.89 million to $16.25 million.
- Net operating cash flow has slightly increased to $50.20 million or 6.50% when compared to the same quarter last year. In addition, TFS FINANCIAL CORP has also vastly surpassed the industry average cash flow growth rate of -172.27%.
- The gross profit margin for TFS FINANCIAL CORP is rather high; currently it is at 67.90%. 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 15.76% trails the industry average.
- This stock has managed to rise its share value by 38.98% over the past twelve months. 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.
- TFS FINANCIAL CORP has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. Stable earnings per share over the past two years indicate the company has sound management over its earnings and share float. We anticipate the company beginning to experience more growth in the coming year. During the past fiscal year, TFS FINANCIAL CORP reported lower earnings of $0.03 versus $0.04 in the prior year. This year, the market expects an improvement in earnings ($0.18 versus $0.03).