NEW YORK ( TheStreet) -- Homeowners Choice (Nasdaq: HCII) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including poor profit margins and disappointing return on equity. Highlights from the ratings report include:
- The gross profit margin for HOMEOWNERS CHOICE INC is currently extremely low, coming in at 7.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.40% trails that of the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, HOMEOWNERS CHOICE INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- HOMEOWNERS CHOICE INC has improved earnings per share by 20.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HOMEOWNERS CHOICE INC reported lower earnings of $0.81 versus $1.51 in the prior year. This year, the market expects an improvement in earnings ($0.89 versus $0.81).
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.6%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the Insurance industry average, but is less than that of the S&P 500. The net income increased by 13.6% when compared to the same quarter one year prior, going from $0.70 million to $0.79 million.