The firm said it lowered its rating on the insurance holding company based on its belief that although the insurance sector has been preforming well, it will likely continue to face high costs.
The Chicago, IL. based corporation's core business includes commercial property and casual insurance operations. The business operates in two segments, CNA Specialty and CNA Commercial.
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Separately, TheStreet Ratings team rates CNA FINANCIAL CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CNA FINANCIAL CORP (CNA) 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 largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CNA's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- Net operating cash flow has increased to $469.00 million or 33.23% when compared to the same quarter last year. Despite an increase in cash flow, CNA FINANCIAL CORP's average is still marginally south of the industry average growth rate of 33.95%.
- CNA, with its decline in revenue, underperformed when compared the industry average of 21.6%. Since the same quarter one year prior, revenues slightly dropped by 1.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Insurance industry and the overall market, CNA FINANCIAL CORP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: CNA Ratings Report