NEW YORK ( TheStreet) -- Flagstone Reinsurance Holdings (NYSE: FSR) has been upgraded by TheStreet Ratings from sell to hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity. Highlights from the ratings report include:
- FSR's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- The revenue fell significantly faster than the industry average of 20.7%. Since the same quarter one year prior, revenues fell by 16.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of FLAGSTONE REINSURANCE HLD SA has not done very well: it is down 20.86% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- 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 252.3% when compared to the same quarter one year ago, falling from $13.27 million to -$20.21 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Insurance industry and the overall market, FLAGSTONE REINSURANCE HLD SA's return on equity significantly trails that of both the industry average and the S&P 500.