HomeStreet Inc Stock Downgraded (HMST)

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) -- HomeStreet (Nasdaq: HMST) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income has significantly decreased by 104.0% when compared to the same quarter one year ago, falling from $21.50 million to -$0.86 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, HOMESTREET INC's return on equity is below that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 26.24%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 104.10% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • HOMESTREET INC 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, HOMESTREET INC reported lower earnings of $1.61 versus $5.62 in the prior year. This year, the market expects an improvement in earnings ($2.34 versus $1.61).
  • The revenue fell significantly faster than the industry average of 102.0%. Since the same quarter one year prior, revenues fell by 34.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

HomeStreet, Inc., through its subsidiaries, provides various financial services to consumers and businesses in the Pacific Northwest and Hawaii. The company has a P/E ratio of 5.9, below the S&P 500 P/E ratio of 17.7. HomeStreet has a market cap of $266.4 million and is part of the financial sector and banking industry. Shares are down 10% year to date as of the close of trading on Thursday.

You can view the full HomeStreet Ratings Report or get investment ideas from our investment research center.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

If you liked this article you might like

7 Breakout Stocks Spiking on Big Volume

Sell Community Banks With Too Many Real Estate, Construction Loans

Insider Trading Alert - SRDX, HMST And FEYE Traded By Insiders

Homestreet (HMST) Upgraded From Sell to Hold

Insider Trading Alert - CNBKA, HMST And DGICA Traded By Insiders