NEW YORK ( TheStreet) -- United Fire & Casualty CO (Nasdaq: UFCS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including 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 5.0%. Since the same quarter one year prior, revenues rose by 27.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 85.9% when compared to the same quarter one year prior, rising from $9.09 million to $16.89 million.
- Compared to its price level of one year ago, UFCS is down 4.10% to its most recent closing price of 19.21. Looking ahead, our view is that this company's fundamentals will not have much impact either way, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The gross profit margin for UNITED FIRE GROUP INC is currently extremely low, coming in at 11.60%. Regardless of UFCS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, UFCS's net profit margin of 8.80% compares favorably to the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, UNITED FIRE GROUP INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff