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) -- SWS Group (NYSE: SWS) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, increase in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow.
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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 Capital Markets industry. The net income increased by 105.7% when compared to the same quarter one year prior, rising from -$5.64 million to $0.32 million.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- SWS GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SWS GROUP INC reported poor results of -$1.24 versus -$0.36 in the prior year. This year, the market expects an improvement in earnings (-$0.02 versus -$1.24).
- The gross profit margin for SWS GROUP INC is currently extremely low, coming in at 13.07%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.40% significantly trails the industry average.
- Net operating cash flow has significantly decreased to -$80.16 million or 50.84% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.