NEW YORK ( TheStreet) -- National Western Life Insurance (Nasdaq: NWLI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and poor profit margins. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 20.7%. Since the same quarter one year prior, revenues rose by 44.7%. 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.
- NWLI 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.
- NATIONAL WESTERN LIFE's earnings per share declined by 33.7% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, NATIONAL WESTERN LIFE increased its bottom line by earning $20.04 versus $12.51 in the prior year.
- Net operating cash flow has decreased to $40.45 million or 12.68% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 33.7% when compared to the same quarter one year ago, falling from $20.81 million to $13.79 million.