NEW YORK ( TheStreet) -- Stewart Information Services Corporation (NYSE: STC) has been upgraded by TheStreet Ratings from sell 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, attractive valuation levels and increase in stock price during the past year. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • The gross profit margin for STEWART INFORMATION SERVICES is currently extremely low, coming in at 2.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.50% trails that of the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, STEWART INFORMATION SERVICES underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • STEWART INFORMATION SERVICES's earnings per share declined by 37.8% 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, STEWART INFORMATION SERVICES continued to lose money by earning -$0.85 versus -$3.02 in the prior year. This year, the market expects an improvement in earnings ($0.18 versus -$0.85).
  • STC's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels.

Stewart Information Services Corporation provides title insurance and related information services required for settlement by the real estate and mortgage industries. It operates in two segments, Title Insurance-Related Services and Real Estate Information. The company has a P/E ratio of 70.7, below the average insurance industry P/E ratio of 106 and above the S&P 500 P/E ratio of 17.7. Stewart Information Services has a market cap of $192.9 million and is part of the financial sector and insurance industry. Shares are down 10% year to date as of the close of trading on Tuesday.

You can view the full Stewart Information Services Ratings Report or get investment ideas from our investment research center.
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