NEW YORK ( TheStreet) -- Baldwin & Lyons (Nasdaq: BWINB) has been upgraded by TheStreet Ratings from hold to buy. 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. We feel these strengths outweigh the fact that the company has had sub par growth in net income. 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 suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over 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 share price of BALDWIN & LYONS has not done very well: it is down 12.26% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Insurance industry. The net income has significantly decreased by 46.4% when compared to the same quarter one year ago, falling from $10.25 million to $5.50 million.
-- Written by a member of TheStreet RatingsStaff