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, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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- TFS FINANCIAL CORP has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TFS FINANCIAL CORP increased its bottom line by earning $0.18 versus $0.03 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus $0.18).
- 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 1325.8% when compared to the same quarter one year prior, rising from $1.11 million to $15.77 million.
- The gross profit margin for TFS FINANCIAL CORP is rather high; currently it is at 68.86%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, TFSL's net profit margin of 16.11% significantly trails the industry average.
- This stock has managed to rise its share value by 28.20% 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.
- The revenue fell significantly faster than the industry average of 102.5%. Since the same quarter one year prior, revenues fell by 10.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.