NEW YORK (TheStreet) -- Shares of ACE Limited  (ACE) fell 1.03% to $111.74 in afternoon trading Tuesday ahead of the insurance company's fourth-quarter earnings report after the market close.

The consensus estimate calls for ACE Limited to post earnings of $2.29 a share on revenue of $3.8 billion. In the fourth quarter last year, the company reported EPS of $2.39, which handily beat the consensus estimate of $2.01, according to analysts polled by Thomson Reuters. Revenue totaled $3.712 billion, which easily surpassed analysts' expectations of $3.389 billion.

In the third quarter of 2014, ACE Limited reported EPS of $2.64, which beat the consensus estimate of $2.34. Revenue totaled $4.232 billion, which surpassed analysts' expectations of $4.113 billion.

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TheStreet Recommends

Separately TheStreet Ratings team rates ACE LTD as a "buy" with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ACE LTD (ACE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ACE's revenue growth trails the industry average of 21.3%. Since the same quarter one year prior, revenues slightly increased by 0.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • ACE's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Net operating cash flow has increased to $1,126.00 million or 21.33% when compared to the same quarter last year. Despite an increase in cash flow, ACE LTD's average is still marginally south of the industry average growth rate of 29.92%.
  • ACE LTD's earnings per share declined by 12.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ACE LTD increased its bottom line by earning $10.92 versus $7.88 in the prior year. For the next year, the market is expecting a contraction of 11.8% in earnings ($9.63 versus $10.92).
  • You can view the full analysis from the report here: ACE Ratings Report

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