Tower Group Inc. Stock Upgraded (TWGP)

Editor's Note: 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.

NEW YORK (TheStreet) -- Tower Group (Nasdaq:TWGP) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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Highlights from the ratings report include:

• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 237.5% when compared to the same quarter one year prior, rising from -$15.73 million to $21.63 million.
• TWGP's revenue growth trails the industry average of 21.6%. Since the same quarter one year prior, revenues slightly increased by 4.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
• Despite currently having a low debt-to-equity ratio of 0.43, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
• TOWER GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, TOWER GROUP INC reported lower earnings of $1.46 versus $2.41 in the prior year. For the next year, the market is expecting a contraction of 117.8% in earnings (-$0.26 versus $1.46).

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Tower Group, Inc., through its subsidiaries, provides commercial, specialty, and personal property and casualty insurance products and services to businesses in various industries and to individuals in the United States. The company has a P/E ratio of 15.5, below the S&P 500 P/E ratio of 17.7. Tower Group has a market cap of $744 million and is part of the financial sector and insurance industry. Shares are up 8.9% year to date as of the close of trading on Thursday.

You can view the full Tower Group Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

Editor's Note: 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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For more information on Tower Group Inc. click any of the following:

• Tower Group Inc. Stock Price

• Tower Group Inc. Analyst Ratings

• Tower Group Inc. Key Stats & Profile

• Tower Group Inc. Earnings

• Tower Group Inc. Ratio Comparison

• Tower Group Inc. Growth Rates

• Tower Group Inc. Balance Sheet

• Tower Group Inc. Cash Flow

• Tower Group Inc. Income Statement