Meadowbrook Insurance Group Inc. Stock Downgraded (MIG)

NEW YORK ( TheStreet) -- Meadowbrook Insurance Group (NYSE: MIG) 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, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. 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 disappointing return on equity.

Highlights from the ratings report include:
  • MIG's revenue growth has slightly outpaced the industry average of 13.1%. Since the same quarter one year prior, revenues rose by 15.1%. 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.
  • MIG's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, MEADOWBROOK INS GROUP INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for MEADOWBROOK INS GROUP INC is currently extremely low, coming in at 0.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.30% is significantly below that of the industry average.

Meadowbrook Insurance Group, Inc., through its subsidiaries, operates as a specialty commercial insurance underwriter and insurance administration services company in the United States. The company has a P/E ratio of 9.2, equal to the average insurance industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Meadowbrook Insurance Group has a market cap of $334.9 million and is part of the financial sector and insurance industry. Shares are down 37.6% year to date as of the close of trading on Tuesday.

You can view the full Meadowbrook Insurance Group 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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