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) -- Federated National (Nasdaq: FNHC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, attractive valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • FNHC's revenue growth has slightly outpaced the industry average of 17.7%. Since the same quarter one year prior, revenues rose by 18.9%. 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.
  • Compared to its closing price of one year ago, FNHC's share price has jumped by 71.86%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, FNHC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • FEDERATED NATIONAL HLDG CO's earnings per share declined by 48.0% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, FEDERATED NATIONAL HLDG CO turned its bottom line around by earning $0.53 versus -$0.05 in the prior year.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Insurance industry and the overall market, FEDERATED NATIONAL HLDG CO's return on equity is below that of both the industry average and the S&P 500.
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Federated National Holding Company, through its subsidiaries, engages in insurance underwriting, distribution, and claims processing primarily in the United States. The company has a P/E ratio of 9.8, below the S&P 500 P/E ratio of 17.7. Federated has a market cap of $48.3 million and is part of the financial sector and insurance industry. Shares are up 13.5% year to date as of the close of trading on Thursday.

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

-- Written by a member of TheStreet Ratings Staff

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.

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