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Why is it Worth Holding Stewart Information (STC) Stock?
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Stewart Information Services Corporation’s (STC - Free Report) solid Title insurance business, strong balance sheet, and favorable growth estimates make it worth retaining in one’s portfolio.
Zacks Rank and Share Price Performance
Stewart Information currently carries a Zacks Rank #3 (Hold). Year to date, the stock has rallied 26.2%, outperforming the industry’s increase of 16.1%, the Finance sector’s rally of 18.6%, and the Zacks S&P 500 composite’s rise of 20%.
Image Source: Zacks Investment Research
Growth Projections
The Zacks Consensus Estimate for 2021 earnings is pegged at $9.12, indicating a 42.6% increase from the year-ago reported figure. The company has a Growth Score of A. This style score analyzes the growth prospects of a company.
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 24.1%, comparing favorably with the industry’s 5.7% and reflecting the company’s efficiency in utilizing shareholders’ fund. It has been increasing core return on equity over the last two years and aims to generate mid-teens core ROE over time.
Estimate Revision
The Zacks Consensus Estimate for 2021 has moved 20.5% north while the same for 2022 has moved up 3.5% in the past 60 days, reflecting analyst optimism.
Style Score
The company has an impressive VGM Score of A. This style score rates stocks on their combined weighted styles, helping to identify those with the most attractive value, best growth, and most promising momentum.
Business Tailwinds
With the fourth largest domestic market share in title insurance, Stewart Information looks to be the premier title services company. This title insurer thus remains focused on growing its core Title business via acquisitions of individual title agencies and smaller title underwriters.
In its efforts to consolidate its presence in the commercial operations, the insurer acquired Thomas Title & Escrow team and offices in Scottsdale, Houston, and Dallas in June 2021 followed by the acquisition of Title First Agency buyout in July 2021.
Further, to consolidate its presence in the mortgage finance space, it acquired Cloudvirga. The addition of Cloudvirga will help the acquirer ramp up its digital offerings and ensure a seamless end-to-end experience in real estate transactions. This is in tandem with the company’s strategy to improve service and digital capabilities.
The company operates in the housing market and has been benefiting from positive demographic tailwinds and attractive mortgage rates. Given its focus on Title insurance and the real-estate closing process, the company is well poised to capitalize on the long-term growth opportunities.
The insurer remains focused on gaining scale in attractive direct markets, improving scale and geographic focus in agency and commercial operations, and scaling and broadening lender services that in due time should drive long-term growth.
Solid Dividend History
The company has a solid track of paying dividends each quarter. Its current dividend yield of 2.2% is better than the industry average of 0.4%. A stable cash flow supports uninterrupted payout.
Strong Capital Position
Stewart Information Services enjoys a strong balance sheet. Cash and investments were about $600 million over regulatory requirements and about $225 million available on its line of credit facility as of Jun 30, 2021.
Image: Bigstock
Why is it Worth Holding Stewart Information (STC) Stock?
Stewart Information Services Corporation’s (STC - Free Report) solid Title insurance business, strong balance sheet, and favorable growth estimates make it worth retaining in one’s portfolio.
Zacks Rank and Share Price Performance
Stewart Information currently carries a Zacks Rank #3 (Hold). Year to date, the stock has rallied 26.2%, outperforming the industry’s increase of 16.1%, the Finance sector’s rally of 18.6%, and the Zacks S&P 500 composite’s rise of 20%.
Image Source: Zacks Investment Research
Growth Projections
The Zacks Consensus Estimate for 2021 earnings is pegged at $9.12, indicating a 42.6% increase from the year-ago reported figure. The company has a Growth Score of A. This style score analyzes the growth prospects of a company.
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 24.1%, comparing favorably with the industry’s 5.7% and reflecting the company’s efficiency in utilizing shareholders’ fund. It has been increasing core return on equity over the last two years and aims to generate mid-teens core ROE over time.
Estimate Revision
The Zacks Consensus Estimate for 2021 has moved 20.5% north while the same for 2022 has moved up 3.5% in the past 60 days, reflecting analyst optimism.
Style Score
The company has an impressive VGM Score of A. This style score rates stocks on their combined weighted styles, helping to identify those with the most attractive value, best growth, and most promising momentum.
Business Tailwinds
With the fourth largest domestic market share in title insurance, Stewart Information looks to be the premier title services company. This title insurer thus remains focused on growing its core Title business via acquisitions of individual title agencies and smaller title underwriters.
In its efforts to consolidate its presence in the commercial operations, the insurer acquired Thomas Title & Escrow team and offices in Scottsdale, Houston, and Dallas in June 2021 followed by the acquisition of Title First Agency buyout in July 2021.
Further, to consolidate its presence in the mortgage finance space, it acquired Cloudvirga. The addition of Cloudvirga will help the acquirer ramp up its digital offerings and ensure a seamless end-to-end experience in real estate transactions. This is in tandem with the company’s strategy to improve service and digital capabilities.
The company operates in the housing market and has been benefiting from positive demographic tailwinds and attractive mortgage rates. Given its focus on Title insurance and the real-estate closing process, the company is well poised to capitalize on the long-term growth opportunities.
The insurer remains focused on gaining scale in attractive direct markets, improving scale and geographic focus in agency and commercial operations, and scaling and broadening lender services that in due time should drive long-term growth.
Solid Dividend History
The company has a solid track of paying dividends each quarter. Its current dividend yield of 2.2% is better than the industry average of 0.4%. A stable cash flow supports uninterrupted payout.
Strong Capital Position
Stewart Information Services enjoys a strong balance sheet. Cash and investments were about $600 million over regulatory requirements and about $225 million available on its line of credit facility as of Jun 30, 2021.
Stocks to Consider
Some better-ranked stocks in the same space include American Financial Group (AFG - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) , and Everest Re Group , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
American Financial delivered an earnings surprise of 45.73% in the last reported quarter.
Cincinnati Financial delivered an earnings surprise of 80.81% in the last reported quarter.
Everest Re Group delivered an earnings surprise of 62.56% in the last reported quarter.