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Should You Buy Old Republic International (ORI) Stock Now?

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·3 min read
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Old Republic International Corporation’s ORI segmental strength, solid capital position and growth estimates make it a good investment choice. It has a solid surprise history of delivering earnings surprise in the last seven reported quarters.

Zacks Rank & Price Performance

Old Republic currently carries a Zacks Rank #2 (Buy). Year to date, the stock has rallied 33.4%, compared with the industry’s increase of 19.8%, Zacks Finance sector’s increase of 18% and the Zacks S&P 500 composite’s rise of 11.2%.

Growth Projections

The Zacks Consensus Estimate for 2021 earnings is pegged at $2.35, up 4.9% on 1.5% higher revenues of $7.2 billion.

Return on Equity (ROE)

The company’s ROE for the trailing 12 months is 12%, comparing favorably with the industry’s 8.5%, reflecting its unique combination of specialty property and casualty and Title franchises that offers diversification.  

Estimate Revision

The Zacks Consensus Estimate for 2021 and 2022 has moved 14.6% and 9.3% higher in the past 30 days, reflecting analyst optimism.

Value Score

The company has an impressive Value Score of A. This style score helps find undervalued stocks with great fundamentals. Back-tested results have shown that stocks with a Value Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 are the best investment options.

Business Tailwinds

Its General Insurance segment, a significant and consistent driver of income, should continue its string of sustained growth and stable underwriting profitability, given its niche focus and low property catastrophe exposure. This segment delivered a combined ratio of less than 100 in 14 of the last 15 years, with the average being 96. The company targets combined ratio between 90-95 going forward. It is also targeting lower than 25 expense ratio.

Its Title insurance business should continue to benefit from expanding presence in commercial real estate market. Consistently low loss ratio (averaged 4.9% in last 15 years) helps it produce increasing income from growth and margin improvement.

Strong Capital Position

With improving cash balance and low leverage ratio, the third-largest title insurer in the country has been strengthening its balance sheet.

Banking on strong capital position, the company increased dividend for 40 straight years and paid dividend for last 80 years. Its dividend yield of 3.4% betters the industry average of 2%, making it an attractive pick for yield-seeking investors.

Other Stocks to Consider

Some other top-ranked stocks from the insurance space include Assurant AIZ, Horace Mann Educators Corporation HMN and Alleghany Corporation Y, each carrying Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Assurant delivered 26.02% earnings surprise in the last reported quarter.

Horace Mann delivered 44.74% earnings surprise in the last reported quarter.

Alleghany delivered 110.97% earnings surprise in the last reported quarter.

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Assurant, Inc. (AIZ) : Free Stock Analysis Report
 
Alleghany Corporation (Y) : Free Stock Analysis Report
 
Old Republic International Corporation (ORI) : Free Stock Analysis Report
 
Horace Mann Educators Corporation (HMN) : Free Stock Analysis Report
 
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Zacks Investment Research