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Universal Insurance Holdings (UVE) Is Today's Dead Cat Bounce Stock

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.

Trade-Ideas LLC identified Universal Insurance Holdings ( UVE) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Universal Insurance Holdings as such a stock due to the following factors:

  • UVE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.4 million.
  • UVE has traded 249,352 shares today.
  • UVE is up 3.9% today.
  • UVE was down 6.7% yesterday.

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More details on UVE:

Universal Insurance Holdings, Inc., through its subsidiaries, operates as a property and casualty insurance company performing various aspects of insurance underwriting, distribution, and claims. It primarily underwrites homeowners' insurance. The stock currently has a dividend yield of 2.6%. UVE has a PE ratio of 10.5.

The average volume for Universal Insurance Holdings has been 315,700 shares per day over the past 30 days. Universal has a market cap of $435.4 million and is part of the financial sector and insurance industry. The stock has a beta of 1.45 and a short float of 7.6% with 1.99 days to cover. Shares are up 175.6% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Universal Insurance Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, notable return on equity, expanding profit margins and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 5.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 171.69% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, UVE should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Insurance industry and the overall market, UNIVERSAL INSURANCE HLDGS's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for UNIVERSAL INSURANCE HLDGS is rather high; currently it is at 63.84%. It has increased significantly from the same period last year. Along with this, the net profit margin of 18.38% significantly outperformed against the industry average.
  • UNIVERSAL INSURANCE HLDGS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, UNIVERSAL INSURANCE HLDGS increased its bottom line by earning $0.74 versus $0.49 in the prior year.

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