NEW YORK ( TheStreet) -- Hilltop Holdings (NYSE: HTH) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

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 rose by 19.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • HTH's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • HILLTOP HOLDINGS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HILLTOP HOLDINGS INC reported poor results of -$0.24 versus -$0.22 in the prior year. This year, the market expects an improvement in earnings (-$0.19 versus -$0.24).
  • The gross profit margin for HILLTOP HOLDINGS INC is currently extremely low, coming in at 13.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.60% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$4.06 million or 329.34% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Hilltop Holdings Inc., through its subsidiary, NLASCO, Inc., operates as property and casualty insurance company in the United States. The company's personal line products include homeowners, dwelling fire, manufactured home, flood, and vacant policies. The company has a P/E ratio of 20.6, above the S&P 500 P/E ratio of 17.7. Hilltop has a market cap of $466.7 million and is part of the financial sector and insurance industry. Shares are down 14.3% year to date as of the close of trading on Wednesday.

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