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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels.
- 41.20% is the gross profit margin for UNIVERSAL INSURANCE HLDGS 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, the net profit margin of 2.00% trails the industry average.
- 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 92.5% when compared to the same quarter one year ago, falling from $13.08 million to $0.98 million.
- Net operating cash flow has significantly decreased to -$39.26 million or 212.52% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Universal Insurance Holdings, Inc., through its subsidiaries, operates as an insurance company in the United States. The company primarily offers homeowners' insurance; and covers various aspects of insurance underwriting, distribution, and claims processing. The company has a P/E ratio of 4.8, below the average insurance industry P/E ratio of 5.1 and below the S&P 500 P/E ratio of 17.7. Universal has a market cap of $136 million and is part of the
industry. Shares are down 29.6% year to date as of the close of trading on Tuesday.
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