NEW YORK ( TheStreet) -- Safety Insurance Group (Nasdaq: SAFT) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • SAFT's revenue growth trails the industry average of 20.7%. Since the same quarter one year prior, revenues slightly increased by 8.3%. 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.
  • SAFT 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.
  • SAFETY INSURANCE GROUP INC 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SAFETY INSURANCE GROUP INC increased its bottom line by earning $3.74 versus $3.48 in the prior year. For the next year, the market is expecting a contraction of 65.9% in earnings ($1.28 versus $3.74).
  • In its most recent trading session, SAFT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

Safety Insurance Group, Inc., through its subsidiaries, provides private passenger automobile insurance products primarily in Massachusetts and New Hampshire. The company has a P/E ratio of 22.5, above the average insurance industry P/E ratio of 21.9 and above the S&P 500 P/E ratio of 17.7. Safety Insurance Group has a market cap of $634.1 million and is part of the financial sector and insurance industry. Shares are down 7.8% year to date as of the close of trading on Friday.

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