NEW YORK (
-- Fidelity National Financial
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.
Highlights from the ratings report include:
- In its most recent trading session, FNF has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The gross profit margin for FIDELITY NATIONAL FINANCIAL is currently extremely low, coming in at 9.70%. Regardless of FNF's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.50% trails the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, FIDELITY NATIONAL FINANCIAL has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- FNF's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- 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 157.1% when compared to the same quarter one year prior, rising from $16.53 million to $42.50 million.
Fidelity National Financial, Inc., through its subsidiaries, provides title insurance, specialty insurance, claims management services, and information services in the United States. The company has a P/E ratio of 9.4, equal to the average insurance industry P/E ratio and below the S&P 500 P/E ratio of 17. Fidelity National Financial has a market cap of $3.4 billion and is part of the
industry. Shares are up 8.9% year to date as of the close of trading on Thursday.
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