NEW YORK ( TheStreet) -- United Fire & Casualty CO (Nasdaq: UFCS) 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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- The gross profit margin for UNITED FIRE & CAS CO is currently extremely low, coming in at 10.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.00% trails that of the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Insurance industry. The net income has significantly decreased by 69.6% when compared to the same quarter one year ago, falling from $19.11 million to $5.81 million.
- Net operating cash flow has slightly increased to $31.27 million or 5.22% when compared to the same quarter last year. Despite an increase in cash flow, UNITED FIRE & CAS CO's average is still marginally south of the industry average growth rate of 5.69%.
- UFCS's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels.