Rating Change #7
Hartford Financial Services Group
has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels 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 weak operating cash flow.
Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels.
- HIG, with its decline in revenue, underperformed when compared the industry average of 0.7%. Since the same quarter one year prior, revenues fell by 15.4%. Weakness in the company's revenue seems to have hurt the 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 Insurance industry. The net income has significantly decreased by 406.1% when compared to the same quarter one year ago, falling from $33.00 million to -$101.00 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, HARTFORD FINANCIAL SERVICES underperformed against that of the industry average and is significantly less than that of the S&P 500.
The Hartford Financial Services Group, Inc., together with its subsidiaries, provides insurance and financial services primarily in the United States and Japan. The company has a P/E ratio of 99.6, above the average insurance industry P/E ratio of 52.7 and above the S&P 500 P/E ratio of 17.7. Hartford Financial Services Group has a market cap of $7.81 billion and is part of the
industry. Shares are up 10.3% year to date as of the close of trading on Wednesday.
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