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.
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- 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.
-- Written by a member of TheStreet Ratings Staff