NEW YORK ( TheStreet) -- Baldwin & Lyons (Nasdaq: BWINB) 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 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:
- BWINB's revenue growth has slightly outpaced the industry average of 5.0%. Since the same quarter one year prior, revenues rose by 12.6%. 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.
- BWINB's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- BALDWIN & LYONS's earnings per share declined by 46.4% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BALDWIN & LYONS swung to a loss, reporting -$1.90 versus $1.68 in the prior year. This year, the market expects an improvement in earnings ($1.50 versus -$1.90).
- The gross profit margin for BALDWIN & LYONS is currently extremely low, coming in at 10.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.70% trails that of the industry average.
- Net operating cash flow has decreased to $9.70 million or 23.21% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
-- Written by a member of TheStreet Ratings Staff