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Old Republic (ORI) Soars to 52-Week High, Time to Cash Out?

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Zacks Equity Research
·3 min read
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Have you been paying attention to shares of Old Republic International (ORI)? Shares have been on the move with the stock up 7.4% over the past month. The stock hit a new 52-week high of $21.51 in the previous session. Old Republic International has gained 7.4% since the start of the year compared to the 10.1% move for the Zacks Finance sector and the 15.9% return for the Zacks Insurance - Multi line industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on January 28, 2021, Old Republic reported EPS of $0.75 versus consensus estimate of $0.4.

For the current fiscal year, Old Republic is expected to post earnings of $2.05 per share on $7.1 billion in revenues. This represents a -8.48% change in EPS on a -0.31% change in revenues. For the next fiscal year, the company is expected to earn $2.15 per share on $6.96 billion in revenues. This represents a year-over-year change of 4.88% and -1.93%, respectively.

Valuation Metrics

Old Republic may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Old Republic has a Value Score of A. The stock's Growth and Momentum Scores are C and F, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 10.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 9.6X versus its peer group's average of 9.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Old Republic currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Old Republic passes the test. Thus, it seems as though Old Republic shares could have a bit more room to run in the near term.


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Zacks Investment Research