NEW YORK (
-- Montpelier Re Holdings
) 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 expanding profit margins. 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 weak operating cash flow.
Highlights from the ratings report include:
- Net operating cash flow has decreased to $60.70 million or 17.07% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- 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 59.7% when compared to the same quarter one year ago, falling from $104.70 million to $42.20 million.
- 44.30% is the gross profit margin for MONTPELIER RE HOLDINGS which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, MRH's net profit margin of 26.00% significantly outperformed against the industry.
- MRH's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
Montpelier Re Holdings Ltd., through its subsidiaries, provides insurance and reinsurance solutions. The company has a P/E ratio of 5.8, equal to the average insurance industry P/E ratio and below the S&P 500 P/E ratio of 16.1. Montpelier Re has a market cap of $1.1 billion and is part of the
industry. Shares are down 13.7% year to date as of the close of trading on Tuesday.
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