The firm upgraded the holding company for BOFI Federal Bank's rating based on the recent H & R Block (HRB) deal.
H & R Block sold its bank unit to BOFI Federal Bank, which freed the company from Federal Reserve oversight, Reuters reported.
The firm says the H & R Block transaction "is more accretive than we had been modeling and improves the revenue and deposit composition of the bank."
"Additional, the transaction enhances the earnings growth prospect and profitability levels (ROA and ROTCE) going forward," the firm continued.
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TheStreet Ratings team rates BOFI HOLDING INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate BOFI HOLDING INC (BOFI) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, robust revenue growth and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 30.00% and other important driving factors, this stock has surged by 105.86% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BOFI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- BOFI HOLDING INC has improved earnings per share by 30.0% in the most recent quarter compared to the same quarter a year ago. 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, BOFI HOLDING INC increased its bottom line by earning $2.89 versus $2.34 in the prior year. This year, the market expects an improvement in earnings ($3.75 versus $2.89).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry average. The net income increased by 34.7% when compared to the same quarter one year prior, rising from $9.77 million to $13.15 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 26.7%. Since the same quarter one year prior, revenues rose by 17.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, BOFI HOLDING INC's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: BOFI Ratings Report