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Old Republic (ORI) Stock Up 34% YTD: More Room for Upside?

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Shares of Old Republic International Corporation (ORI - Free Report) have gained 34.2% year to date compared with the industry and the Finance sector’s rally of 11.2% and 18.7%, respectively. The Zacks S&P 500 composite has increased 19.3% in the said time frame. With a market capitalization of $8.1 billion, average volume of shares traded in the last three months was 1.7 million.

Old Republic’s total market return has been exceeding the S&P 500 total market return for more than five decades.
 

Zacks Investment Research
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Its position among title insurance providers to residential and commercial markets, niche focus, low property catastrophe exposure at its General Insurance segment, and solid capital position continue to drive Old Republic International. It has a stellar track record of beating earnings estimates in the trailing eight quarters, the average surprise being 48.11%.

Return on equity in the trailing 12 months was 13.1%, better than the industry average of 9.8%. This highlights its unique combination of specialty property and casualty and Title franchises that offers diversification.

The Zacks Consensus Estimate for 2021 and 2022 earnings has moved up 10.6% and 2.1%, respectively, in the past 30 days, reflecting analysts’ optimism.

Will the Bull Run Continue?

The Zacks Consensus Estimate for 2021 indicates year-over-year improvement of 16.1% on 18.7% higher revenues.

Its General Insurance segment should continue to benefit from better segmentation, improved risk selection, pricing precision, and increased use of analytics. It delivered combined ratio below 100 in 14 of the last 15 years. It aims combined ratio between 90 and 95.

Its Title insurance business will likely continue to benefit from expanding presence in the commercial real estate market.

The third largest title insurer in the country has been strengthening its balance sheet with improving cash balance and low leverage ratio.  

Riding on a solid capital position, this Zacks Rank #2 (Buy) title insurer increased dividend for 40 straight years and paid out dividend for the last 80 years. Its dividend yield of 3.4% betters the industry average of 2%, making it an attractive pick for yield-seeking investors. In fact the special dividend approved this August marks the second such dividend this year so far. Old Republic International boasts being one of the 111 companies that have posted at least 25 consecutive years of annual dividend growth.

Its shares are currently undervalued. Its price to book value multiple of 1.2 is lower than the industry average of 1.6. It also has an impressive Value Score of A. Before valuation expands, it is better to take position in the stock.

Other Stocks to Consider

Some other top-ranked stocks include American International Group (AIG - Free Report) , CNO Financial Group (CNO - Free Report) , and MetLife (MET - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AIG delivered an earnings surprise of 27.73% in the last reported quarter.

Cincinnati Financial delivered an earnings surprise of 22.22% in the last reported quarter.

MetLife delivered an earnings surprise of 47.20% in the last reported quarter.