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) -- Atlantic Coast Financial (Nasdaq: ACFC) 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, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
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- 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 2249.5% when compared to the same quarter one year ago, falling from -$0.29 million to -$6.88 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, ATLANTIC COAST FINANCIAL CP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for ATLANTIC COAST FINANCIAL CP is rather low; currently it is at 22.32%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -83.73% is significantly below that of the industry average.
- The share price of ATLANTIC COAST FINANCIAL CP has not done very well: it is down 6.61% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- ATLANTIC COAST FINANCIAL CP 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ATLANTIC COAST FINANCIAL CP reported poor results of -$2.86 versus -$2.67 in the prior year. This year, the market expects an improvement in earnings ($0.09 versus -$2.86).