NEW YORK ( TheStreet) -- First American Financial (NYSE: FAF) has been upgraded by TheStreet Ratings from sell to hold. 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 notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and poor profit margins. Highlights from the ratings report include:
- FAF's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, FIRST AMERICAN FINANCIAL CP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for FIRST AMERICAN FINANCIAL CP is currently extremely low, coming in at 7.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.20% trails that of the industry average.
- Net operating cash flow has decreased to $53.16 million or 18.79% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, FIRST AMERICAN FINANCIAL CP has marginally lower results.