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When Investors Title Company (NASDAQ:ITIC) announced its most recent earnings (31 December 2018), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Investors Title performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see ITIC has performed.
Was ITIC weak performance lately part of a long-term decline?
ITIC’s trailing twelve-month earnings (from 31 December 2018) of US$22m has declined by -15% 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 22%, indicating the rate at which ITIC is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, Investors Title has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 9.0% exceeds the US Insurance industry of 2.3%, indicating Investors Title has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Investors Title’s debt level, has increased over the past 3 years from 12% to 15%.
What does this mean?
Investors Title’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 capricious earnings, can have many factors affecting its business. I recommend you continue to research Investors Title to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ITIC’s future growth? Take a look at our free research report of analyst consensus for ITIC’s outlook.
- Financial Health: Are ITIC’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 31 December 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.