NEW YORK (
) 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 good cash flow from operations. 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 disappointing return on equity.
Highlights from the ratings report include:
- Y's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- Net operating cash flow has remained constant at $77.22 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -13.96%.
- 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 47.7% when compared to the same quarter one year ago, falling from $36.63 million to $19.16 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. When compared to other companies in the Insurance industry and the overall market, ALLEGHANY CORP's return on equity is below that of both the industry average and the S&P 500.
Alleghany Corporation, through its subsidiaries, engages in the property and casualty, and surety insurance business in the United States. The company has a P/E ratio of 17.4, equal to the average insurance industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Alleghany Corp DEL has a market cap of $2.38 billion and is part of the
industry. Shares are down 8.9% year to date as of the close of trading on Friday.
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