NEW YORK ( TheStreet) -- Tower Group (Nasdaq: TWGP) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, 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:
- The revenue growth came in higher than the industry average of 7.0%. Since the same quarter one year prior, revenues slightly increased by 7.5%. 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.
- Net operating cash flow has remained constant at $72.77 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -13.95%.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Insurance industry and the overall market, TOWER GROUP INC's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for TOWER GROUP INC is currently extremely low, coming in at 0.50%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -3.60% is significantly below that of the industry average.