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Investors Title Co. Message Board

  • astral_tsar astral_tsar Jul 30, 2004 8:38 PM Flag


    How much is this stock worth? I think it's worth nearly $60 per share.

    Break the Q2 balance sheet in two:

    1. An operating business with a book value of about $4 per share and underwriting earnings of about $3/share. Value: about twelve times earnings, or $36/share. (That's assuming no future earnings growth ... actual growth has been 14% annually for 20 years.)

    2. A pile of securities worth almost $22 per share, returning 80 or 90 cents per share after tax. (Mostly these are tax-free municipals anyhow.) Value: $22/share.

    Total: $58/share.

    The operating business is excellent, one of a kind. Earnings, book value, and book-value-plus-reserves ("float") have all grown at 14% annually for the past 20 years.

    In contrast to the titans of the title insurance industry, ITIC reserves about 10% of premium revenue for losses. Very conservative. FNF and FAF reserve only about 5%.

97.02+1.18(+1.23%)Oct 26 4:00 PMEDT