When Old Republic International Corporation (NYSE:ORI) released its most recent earnings update (30 September 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Old Republic International has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see ORI has performed.
How Did ORI's Recent Performance Stack Up Against Its Past?
ORI's trailing twelve-month earnings (from 30 September 2019) of US$674m has declined by -13% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 13%, indicating the rate at which ORI is growing has slowed down. What could be happening here? Let's examine what's transpiring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, Old Republic International has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 3.4% exceeds the US Insurance industry of 2.5%, indicating Old Republic International has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Old Republic International’s debt level, has increased over the past 3 years from 4.3% to 11%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 25% to 17% over the past 5 years.
What does this mean?
Old Republic International's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. You should continue to research Old Republic International to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ORI’s future growth? Take a look at our free research report of analyst consensus for ORI’s outlook.
Financial Health: Are ORI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2019. This may not be consistent with full year annual report figures.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.