NEW YORK ( TheStreet) -- Willis Group Holdings (NYSE: WSH) 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, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • 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 83.3% when compared to the same quarter one year ago, falling from $204.00 million to $34.00 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Insurance industry and the overall market, WILLIS GROUP HOLDINGS PLC's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 36.10% is the gross profit margin for WILLIS GROUP HOLDINGS PLC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, WSH's net profit margin of 3.40% significantly trails the industry average.
  • The revenue growth greatly exceeded the industry average of 100.0%. Since the same quarter one year prior, revenues slightly increased by 3.7%. 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.

Willis Group Holdings Public Limited Company and its subsidiaries provide a range of insurance and reinsurance broking, and risk management consulting services to clients in various industries, including aerospace, marine, construction, and energy. The company has a P/E ratio of 15.4, equal to the average insurance industry P/E ratio and below the S&P 500 P/E ratio of 16.9. Willis Group has a market cap of $7 billion and is part of the financial sector and insurance industry. Shares are up 16.3% year to date as of the previous trading day's close.

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