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Stewart Information (STC) Up as Q4 Earnings, Revenues Rise Y/Y

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Shares of Stewart Information Services Corporation (STC - Free Report) gained 1.6% in the last trading session as its top and bottom line increased year over year in the fourth quarter of 2020.

Operating income per share of $2.09 increased 140.2% year over year.

Fourth-quarter results reflect revenue growth across all lines of business and effective cost management. Residential real estate market remained solid driven by strong purchase and refinance demand as the 30-year mortgage rate remained below 3% in the quarter. Commercial saw strong customer activity by year-end.

Stewart Information Services Corporation Price, Consensus and EPS Surprise

 

Behind the Headlines

Operating revenues of $737 million increased 44.5% year over year on the back of higher revenues from direct operations, agency operations and ancillary services.

Net investment income, however, decreased 21% to $4.1 million.

Total expense of $652.9 million increased about 29% year over year due to amounts retained by agencies, employee costs, other operating expenses and title losses and related claims.

Opened orders totaled 152.6 million, up 63.7% year over year. Closed orders totaled 126 million, up 64.1% year over year

Segment Results    

Title: Operating revenues increased 36% year over year to $690.2 million. The upside was driven by increases in direct title revenues and gross independent agency revenues.

Pretax margin of 13.6% expanded 960 bps year over year.

Ancillary Services and Corporate: Operating revenues increased more than six fold year over year to $38 million, driven by acquisitions, partially offset by lower revenues from capital markets search and home equity valuation services operations.

Pretax loss narrowed to $11 million from $16.5 million incurred in the year-ago quarter.

Financial Update

Stewart Information exited the quarter with cash and cash equivalents of $432.7 million, up 30.9% from 2019 end. Notes and contracts payable were $101.8 million, down 8%.

Stockholders’ equity was $1 billion, up 34.5% from 2019 end.

Cash flow from operations was $275.8 million in 2020, up 65.8% year over year.

Zacks Rank

Stewart Information currently has a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and Progressive Corporation (PGR - Free Report) beat the Zacks Consensus Estimate for earnings.

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