ACE Ltd Stock Buy Recommendation Reiterated (ACE)

Editor's Note: 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.

NEW YORK ( TheStreet) -- ACE (NYSE: ACE) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and attractive valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins.

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Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 1741.0% when compared to the same quarter one year prior, rising from -$39.00 million to $640.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 21.6%. Since the same quarter one year prior, revenues rose by 21.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ACE's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

ACE Limited, through its subsidiaries, provides a range of insurance and reinsurance products to insureds worldwide. ACE has a market cap of $28.71 billion and is part of the financial sector and insurance industry. The company has a P/E ratio of 11, below the S&P 500 P/E ratio of 17.7. Shares are up 5.9% year to date as of the close of trading on Tuesday.

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

--Written by a member of TheStreet Ratings Staff.

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