Old Republic (ORI) Stock Rises 13.2% YTD: More Room to Grow?
Old Republic International ORI shares have gained 13.2% year to date (YTD) against the industry’s decrease of 5.7%. The Finance sector has risen 5.9% in the said time frame. With a market capitalization of $7.8 billion, the average volume of shares traded in the last three months was 1.8 million.
Solid market presence, niche focus, low property catastrophe exposure in its General Insurance segment and a strong capital position continue to drive this Zacks Rank #1 (Strong Buy) insurer.
This third-largest title insurer in the country has a solid history of delivering positive surprise in the last five reported quarters and has returned 16% per share for the last 10 years to shareholders. Earnings of this insurer grew 13.4% in the past five years, better than the industry average of 5.5%.
Return on equity in the trailing 12 months was 13.2%, better than the industry average of 10.5%. This highlights its unique combination of Specialty Property and Casualty and Title franchises that offers diversification.
Can ORI Retain the Momentum?
The Zacks Consensus Estimate for ORI’s 2023 earnings has moved north by 8.3%, while that for 2024 has moved up 5.2% in the past 60 days, reflecting analysts’ optimism.
Prudent segmentation, improved risk selection, pricing precision and increased use of analytics should continue to benefit the General Insurance segment. Combined ratio remained below 96 for 14 years. ORI stays focused on achieving combined ratio between 90 and 95. This insurer continues to expect growth and profitability through the year, banking on specialty growth strategy and operational excellence initiatives.
On the other hand, an expanding presence in the commercial real estate market should benefit the Title insurance business.
ORI has been strengthening its balance sheet by improving cash balance and lowering the leverage ratio.
Riding on a solid capital position that benefits from sustained solid operational excellence, ORI increased dividends for 42 straight years. It has been paying dividends for the last 82 years, besides paying special dividends occasionally. Its dividend yield of 3.6% betters the industry average of 2.8%, making it an attractive pick for yield-seeking investors. Old Republic International is one of the 111 companies that have posted at least 27 consecutive years of annual dividend growth.
Attractive Valuation
Shares are trading at a price-to-book multiple of 1.27, lower than the industry average of 2.35.
The company has a Value Score of B. This style score helps find the most attractive value stocks. Back-tested results have shown that stocks with a Value Score of A or B combined with a Zacks Rank #1 or #2 (Buy) offer better returns.
Before its valuation expands, it is advisable to take a position in the stock.
Other Stocks to Consider
Some other top-ranked stocks from the insurance space are Arch Capital Group ACGL, Axis Capital Holdings AXS and ProAssurance PRA. Each of these companies presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital’s earnings surpassed estimates in all the last four quarters, the average beat being 26.83%. The stock has gained 2.9% quarter to date.
The Zacks Consensus Estimate for ACGL’s 2023 and 2024 earnings indicates a 38.2% and 10.4% year-over-year increase, respectively. The expected long-term earnings growth is 10%. The consensus estimate for 2023 and 2024 has moved up 2.3% and 2.5%, respectively, in the past 30 days.
Axis Capital delivered a trailing four-quarter average earnings surprise of 9.75%. YTD, the stock has gained 3.7%.
The Zacks Consensus Estimate for AXS’s 2023 and 2024 earnings indicates a 44.8% and 10.7% year-over-year increase, respectively. The expected long-term earnings growth is 5%. The consensus estimate for AXS’s 2023 and 2024 earnings has moved up 2.8% and 1.5%, respectively, in the past 30 days.
ProAssurance’s earnings surpassed estimates in two of the last four quarters while missing in the other two. YTD, the stock has gained 19.8%.
The Zacks Consensus Estimate for PRA’s 2024 earnings implies a year-over-year rise of 143.5%. The consensus estimate for PRA’s 2023 and 2024 earnings has moved up 25.9% and 2.5%, respectively, in the past 30 days.
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Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
ProAssurance Corporation (PRA) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
Old Republic International Corporation (ORI) : Free Stock Analysis Report
