Why Chemical Financial (CHFC) Stock Is Down Today

NEW YORK (TheStreet) -- Chemical Financial (CHFC) shares are down 1.9% to $30.32 in trading on Monday following the release of the company's first quarter 2014 earnings report.

For the quarter, the financial holding company earned a net income of $13.8 million, or 46 cents per diluted share, missing Thomson Reuters consensus estimate of 48 cents per diluted share.

Total assets for the company were $6.34 billion for the period ending March 31, a year over year quarterly increase from $5.99 billion in March 2013.

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TheStreet Ratings team rates CHEMICAL FINANCIAL CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHEMICAL FINANCIAL CORP (CHFC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 12.8%. Since the same quarter one year prior, revenues slightly increased by 2.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CHEMICAL FINANCIAL CORP has improved earnings per share by 14.3% 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, CHEMICAL FINANCIAL CORP increased its bottom line by earning $2.00 versus $1.85 in the prior year. This year, the market expects an improvement in earnings ($2.07 versus $2.00).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income increased by 23.3% when compared to the same quarter one year prior, going from $11.66 million to $14.38 million.
  • The gross profit margin for CHEMICAL FINANCIAL CORP is currently very high, coming in at 91.27%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.86% is above that of the industry average.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 26.58% over the past year, a rise that has exceeded that of the S&P 500 Index. 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.
  • You can view the full analysis from the report here: CHFC Ratings Report
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