NEW YORK ( TheStreet) -- Investors Title (Nasdaq: ITIC) has been downgraded by TheStreet Ratings from buy to hold. 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 and compelling growth in net income. 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:
  • ITIC has underperformed the S&P 500 Index, declining 10.29% from its price level of one year ago. 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 INVESTORS TITLE CO is rather low; currently it is at 16.20%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.70% trails the industry average.
  • INVESTORS TITLE CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, INVESTORS TITLE CO increased its bottom line by earning $2.79 versus $2.10 in the prior year. For the next year, the market is expecting a contraction of 27.9% in earnings ($2.01 versus $2.79).
  • ITIC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
  • ITIC's very impressive revenue growth greatly exceeded the industry average of 19.8%. Since the same quarter one year prior, revenues leaped by 51.8%. Growth in the company's revenue appears to have helped boost the earnings per share.

Investors Title Company, through its subsidiaries, provides title insurance, as well as tax-deferred real property exchange services in the United States. The company has a P/E ratio of 11, below the average insurance industry P/E ratio of 16.2 and below the S&P 500 P/E ratio of 21.5. Investors Title has a market cap of $69.8 million and is part of the financial sector and insurance industry. Shares are up 0.5% year to date as of the close of trading on Thursday.

You can view the full Investors Title Ratings Report or get investment ideas from our investment research center.
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