NEW YORK ( TheStreet) -- Alterra Capital Holdings (Nasdaq: ALTE) has been upgraded by TheStreet Ratings from hold to buy. 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, attractive valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • ALTE's revenue growth has slightly outpaced the industry average of 20.7%. Since the same quarter one year prior, revenues rose by 21.5%. 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.
  • ALTE'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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • ALTERRA CAPITAL HOLDINGS LTD has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ALTERRA CAPITAL HOLDINGS LTD reported lower earnings of $3.15 versus $4.26 in the prior year. For the next year, the market is expecting a contraction of 62.7% in earnings ($1.18 versus $3.15).

Alterra Capital Holdings Limited, through its subsidiaries, provides specialty insurance and reinsurance products to corporations, public entities, and property and casualty insurers principally in Bermuda, Ireland, the United States, and the United Kingdom. The company has a P/E ratio of 18.9, above the average insurance industry P/E ratio of 17.8 and above the S&P 500 P/E ratio of 17.7. Alterra has a market cap of $2.3 billion and is part of the financial sector and insurance industry. Shares are up 1.9% year to date as of the close of trading on Thursday.

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