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) -- HopFed Bancorp (Nasdaq: HFBC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.
- The gross profit margin for HOPFED BANCORP INC is currently very high, coming in at 73.50%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HFBC's net profit margin of 3.45% significantly trails the industry average.
- The revenue fell significantly faster than the industry average of 29.9%. Since the same quarter one year prior, revenues fell by 13.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- 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 64.0% when compared to the same quarter one year ago, falling from $0.98 million to $0.35 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 on the basis of return on equity, HOPFED BANCORP INC underperformed against that of the industry average and is significantly less than that of the S&P 500.