NEW YORK (TheStreet) -- Shares of Allied World Assurance Co. (AWH) are down -3.78% to $37.24 on heavy trading volume after the seller of aviation and environmental insurance reported that second quarter profit missed analysts' estimates as sales fell, Bloomberg reports.
Operating income was 76 cents a share, missing by 8 cents the average estimate of 9 analysts surveyed by Bloomberg.
Net policy sales dropped 4.7% to $553.9 million as a decline at the reinsurance unit offset gains from the U.S. and international insurance segments, the company said.
The company's second quarter net income was $151.9 million, compared with a loss of $1.9 million a year earlier that was driven by investment results, Bloomberg noted.
TheStreet Ratings team rates ALLIED WORLD ASSURANCE CO AG as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALLIED WORLD ASSURANCE CO AG (AWH) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, solid stock price performance, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AWH's revenue growth has slightly outpaced the industry average of 8.0%. Since the same quarter one year prior, revenues slightly increased by 9.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Although AWH's debt-to-equity ratio of 0.22 is very low, it is currently higher than that of the industry average.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
- Net operating cash flow has significantly increased by 2133.73% to $303.10 million when compared to the same quarter last year. In addition, ALLIED WORLD ASSURANCE CO AG has also vastly surpassed the industry average cash flow growth rate of 4.37%.
- 45.74% is the gross profit margin for ALLIED WORLD ASSURANCE CO AG which we consider to be strong. Regardless of AWH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AWH's net profit margin of 27.99% significantly outperformed against the industry.
- You can view the full analysis from the report here: AWH Ratings Report