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) -- Central Federal (Nasdaq: CFBK) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally disappointing historical performance in the stock itself.
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- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, CENTRAL FEDERAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The share price of CENTRAL FEDERAL CORP has not done very well: it is down 8.28% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating 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 79.8% when compared to the same quarter one year prior, rising from -$1.91 million to -$0.39 million.
- CENTRAL FEDERAL CORP has experienced 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, CENTRAL FEDERAL CORP continued to lose money by earning -$1.69 versus -$7.10 in the prior year.
- The gross profit margin for CENTRAL FEDERAL CORP is currently very high, coming in at 70.86%. 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 -18.27% is in-line with the industry average.