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, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
Highlights from the ratings report include:
- CNA's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- CNA FINANCIAL CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CNA FINANCIAL CORP increased its bottom line by earning $2.36 versus $1.11 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus $2.36).
- The gross profit margin for CNA FINANCIAL CORP is currently extremely low, coming in at 11.00%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 5.70% trails that of the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Insurance industry and the overall market, CNA FINANCIAL CORP's return on equity is below that of both the industry average and the S&P 500.
CNA Financial Corporation, through its subsidiaries, provides property and casualty insurance products to small, middle-market, and large businesses and organizations primarily in the United States, Europe, Canada, and Hawaii. The company has a P/E ratio of 12.5, below the average insurance industry P/E ratio of 13.2 and below the S&P 500 P/E ratio of 17.7. CNA Financial has a market cap of $6.4 billion and is part of the
industry. Shares are down 16.9% year to date as of the close of trading on Friday.
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