NEW YORK ( TheStreet) -- Brown & Brown (NYSE: BRO) 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, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.0%. Since the same quarter one year prior, revenues slightly increased by 5.2%. 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.
  • BRO'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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.
  • 36.40% is the gross profit margin for BROWN & BROWN INC which we consider to be strong. Regardless of BRO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BRO's net profit margin of 17.00% significantly outperformed against the industry.
  • BROWN & BROWN INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, BROWN & BROWN INC increased its bottom line by earning $1.13 versus $1.09 in the prior year. For the next year, the market is expecting a contraction of 2.6% in earnings ($1.10 versus $1.13).

Brown & Brown, Inc., a diversified insurance agency, markets and sells insurance products and services primarily in the United States. Its Retail segment provides insurance products and services to commercial, public and quasi-public entity, professional, and individual customers. The company has a P/E ratio of 20.2, equal to the average insurance industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Brown & Brown has a market cap of $3.2 billion and is part of the financial sector and insurance industry. Shares are down 9.2% year to date as of the close of trading on Tuesday.

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