Universal Insurance Holdings Inc. Stock Downgraded (UVE)

NEW YORK ( TheStreet) -- Universal Insurance Holdings (AMEX: UVE) has been downgraded by TheStreet Ratings from buy 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels.
  • The gross profit margin for UNIVERSAL INSURANCE HLDGS is rather high; currently it is at 56.50%. Regardless of UVE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, UVE's net profit margin of 16.40% compares favorably to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Insurance industry. The net income has significantly decreased by 29.0% when compared to the same quarter one year ago, falling from $13.90 million to $9.87 million.
  • Net operating cash flow has decreased to $95.27 million or 26.76% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Universal Insurance Holdings, Inc., through its subsidiaries, operates as an insurance company in the United States. The company primarily offers homeowners' insurance; and covers various aspects of insurance underwriting, distribution, and claims processing. The company has a P/E ratio of nine, equal to the average insurance industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Universal has a market cap of $144.6 million and is part of the financial sector and insurance industry. Shares are up 0.6% year to date as of the close of trading on Tuesday.

You can view the full Universal Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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