NEW YORK ( TheStreet) -- Hanover Insurance Group (NYSE: THG) has been upgraded by TheStreet Ratings from hold to buy. Among the primary strengths of the company is its robust revenue growth -- not just in the most recent periods but in previous quarters as well. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. 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 25.9%. 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.
- HANOVER INSURANCE GROUP INC's earnings per share declined by 18.4% 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, HANOVER INSURANCE GROUP INC reported lower earnings of $0.71 versus $3.30 in the prior year. This year, the market expects an improvement in earnings ($4.00 versus $0.71).
- The change in net income from the same quarter one year ago has exceeded that of the Insurance industry average, but is less than that of the S&P 500. The net income has decreased by 15.6% when compared to the same quarter one year ago, dropping from $58.40 million to $49.30 million.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, THG has underperformed the S&P 500 Index, declining 12.53% from its price level of one year ago. 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.
-- Written by a member of TheStreet RatingsStaff