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. NEW YORK ( TheStreet) -- Alleghany (Nasdaq: Y) 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, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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- The revenue growth came in higher than the industry average of 19.1%. Since the same quarter one year prior, revenues slightly increased by 8.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Although Y's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average.
- In its most recent trading session, Y has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Insurance industry average, but is greater than that of the S&P 500. The net income increased by 321.6% when compared to the same quarter one year prior, rising from -$92.61 million to $205.25 million.
- ALLEGHANY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ALLEGHANY CORP reported lower earnings of $37.44 versus $59.45 in the prior year. For the next year, the market is expecting a contraction of 26.5% in earnings ($27.50 versus $37.44).