Old Republic (ORI) Stock Rises 10% YTD: More Upside Left?
Old Republic International ORI shares have gained 10.3% year to date (YTD) against the industry’s decrease of 5.6%. The Finance sector has risen 2.8% in the said time frame. With a market capitalization of $7.6 billion, the average volume of shares traded in the last three months was 1.7 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.
The insurer has a solid history of delivering positive surprise in the last five reported quarters. Earnings of this insurer grew 13.4% in the last 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%, reflecting a unique combination of Specialty Property and Casualty and Title franchises that offers diversification.
Can ORI Retain the Momentum?
ORI’s General Insurance segment should continue to benefit from segmentation, better risk selection, meticulous pricing and increased use of analytics. These have helped it deliver a combined ratio below 96 for 14 years. ORI aims for a combined ratio between 90 and 95.
The Title business should continue to benefit from an expanding presence in the commercial real estate market.
This third-largest title insurer in the country has been strengthening its balance sheet by improving cash balance and lowering the leverage ratio.
ORI has an impressive dividend history banking on operational excellence. It 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.
Notably, Old Republic International is one of the 111 companies that have posted at least 27 consecutive years of annual dividend growth.
Attractive Valuation
Its shares are trading at a price-to-book multiple of 1.24, lower than the industry average of 2.39.
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 industry are ProAssurance Corporation PRA, Cincinnati Financial CINF and Chubb Limited CB. ProAssurance currently flaunts a Zacks Rank #1, while Cincinnati Financial and Chubb carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.
ProAssurance has a decent record of beating earnings estimates in two of the last four quarters and missing twice. PRA has gained 2% so far this year.
The Zacks Consensus Estimate for PRA’s 2024 earnings per share is pegged at 83 cents, indicating a year-over-year jump of 143.5%.
Cincinnati Financial has a decent track record of beating earnings estimates in three of the last four quarters and missing once, the average beat being 25.25%. Year to date, CINF has lost 0.6%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share is pegged at $5.01 and $5.88, suggesting year-over-year growth of 18.2% and 17.5%, respectively..
Chubb has a solid record of beating earnings estimates in three of the last four quarters and missing in one, the average beat being 3.36%. Year to date, CB has lost 4.7%.
The Zacks Consensus Estimate for CB’s 2023 and 2024 earnings per share is pegged at $18.18 and $19.86, implying year-over-year increases of 19.3% and 9.2%, respectively.
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Chubb Limited (CB) : Free Stock Analysis Report
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
ProAssurance Corporation (PRA) : Free Stock Analysis Report
Old Republic International Corporation (ORI) : Free Stock Analysis Report
