TSC Ratings' Updates: Allianz

The following ratings changes were generated on Monday, Dec. 1.

We rate Allianz (AZ Quote) a hold. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.

The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and poor profit margins.

Allianz, with its decline in revenue, underperformed when compared the industry average of 6.6%. Since the same quarter one year prior, revenue fell by 33.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

Despite currently having a low debt-to-equity ratio of 0.59, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. 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 insurance industry and the overall market, Allianz's return on equity exceeds that of both the industry average and the S&P 500.

The gross profit margin for Allianz is currently extremely low, coming in at 1.90%. It has decreased significantly from the same period last year. Along with this, the net profit margin of negative 14.30% is significantly below that of the industry average. Net operating cash flow has significantly decreased to negative $5,908.86 million, or 328.99%, when compared to the same quarter last year.