NEW YORK ( TheStreet) -- Axis Capital Holdings (NYSE: AXS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • AXS's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • Net operating cash flow has increased to $399.48 million or 21.54% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -13.95%.
  • Despite the stagnant revenue growth, the company outperformed against the industry average of 7.0%. Since the same quarter one year prior, revenues have remained constant. Even though the company's revenue remained stagnant, the earnings per share decreased.
  • AXIS CAPITAL HOLDINGS LTD's earnings per share declined by 6.7% in the most recent quarter compared to 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, AXIS CAPITAL HOLDINGS LTD increased its bottom line by earning $6.07 versus $3.01 in the prior year. For the next year, the market is expecting a contraction of 110.9% in earnings (-$0.66 versus $6.07).

AXIS Capital Holdings Limited, through its subsidiaries, provides various insurance and reinsurance products to insureds and reinsureds worldwide. The company operates in two segments, Insurance and Reinsurance. The company has a P/E ratio of 22.9, below the average insurance industry P/E ratio of 30.8 and above the S&P 500 P/E ratio of 17.7. Axis has a market cap of $4.2 billion and is part of the financial sector and insurance industry. Shares are down 13.1% year to date as of the close of trading on Wednesday.

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