Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. Trade-Ideas LLC identified Tower Group ( TWGP) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Tower Group as such a stock due to the following factors:
- TWGP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.5 million.
- TWGP has traded 2.0 million shares today.
- TWGP is down 3.5% today.
- TWGP was up 10% yesterday.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in TWGP with the Ticky from Trade-Ideas. See the FREE profile for TWGP NOW at Trade-Ideas More details on TWGP: Tower Group International, Ltd., through its subsidiaries, underwrites insurance and reinsurance products in Bermuda, the United States, and London markets. The company provides commercial, personal, and specialty insurance and reinsurance products. The stock currently has a dividend yield of 3.8%. Currently there is 1 analyst that rates Tower Group a buy, no analysts rate it a sell, and 4 rate it a hold. The average volume for Tower Group has been 257,700 shares per day over the past 30 days. Tower Group has a market cap of $758.4 million and is part of the financial sector and insurance industry. The stock has a beta of 0.75 and a short float of 8.4% with 0.88 days to cover. Shares are up 11% year to date as of the close of trading on Friday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates Tower Group as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow. Highlights from the ratings report include:
- TWGP's revenue growth has slightly outpaced the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 1.9%. 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.
- The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels.
- TOWER GROUP INTL LTD's earnings per share declined by 13.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TOWER GROUP INTL LTD swung to a loss, reporting -$0.71 versus $1.29 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus -$0.71).
- The gross profit margin for TOWER GROUP INTL LTD is currently extremely low, coming in at 7.85%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.17% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$53.11 million or 272.06% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full Tower Group Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.