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Analysts Just Shipped A Meaningful Upgrade To Their Old Republic International Corporation (NYSE:ORI) Estimates

Simply Wall St
·3 mins read

Old Republic International Corporation (NYSE:ORI) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

Following the latest upgrade, the two analysts covering Old Republic International provided consensus estimates of US$5.1b revenue in 2020, which would reflect an uneasy 16% decline on its sales over the past 12 months. After this upgrade, the company is anticipated to report a loss of US$0.44 in 2020, a sharp decline from a profit over the last year. Yet before this consensus update, the analysts had been forecasting revenues of US$4.4b and losses of US$0.90 per share in 2020. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

View our latest analysis for Old Republic International

NYSE:ORI Past and Future Earnings April 28th 2020
NYSE:ORI Past and Future Earnings April 28th 2020

Yet despite these upgrades, the analysts cut their price target 8.7% to US$21.00, implicitly signalling that the ongoing losses are likely to weigh negatively on Old Republic International's valuation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with the forecast 16% revenue decline a notable change from historical growth of 3.7% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Old Republic International is expected to lag the wider industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Old Republic International is moving incrementally towards profitability. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, Old Republic International could be one for the watch list.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.