NEW YORK (TheStreet) -- Global Indemnity (Nasdaq:GBLI) has been upgraded by TheStreet Ratings from hold to buy. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- GBLI's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- GLOBAL INDEMNITY PLC's earnings per share declined by 19.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, GLOBAL INDEMNITY PLC swung to a loss, reporting -$1.30 versus $2.81 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus -$1.30).
- The revenue fell significantly faster than the industry average of 13.1%. Since the same quarter one year prior, revenues fell by 24.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The gross profit margin for GLOBAL INDEMNITY PLC is currently extremely low, coming in at 13.00%. Regardless of GBLI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, GBLI's net profit margin of 14.10% compares favorably to the industry average.
- In its most recent trading session, GBLI has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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