Old Republic International (ORI): Buy, Sell, or Hold Post Q1 Earnings?

Old Republic International trades at $37.13 and has moved in lockstep with the market. Its shares have returned 5.7% over the last six months while the S&P 500 has gained 5.4%.

Is there a buying opportunity in Old Republic International, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.

Why Is Old Republic International Not Exciting?

We're cautious about Old Republic International. Here are three reasons why you should be careful with ORI and a stock we'd rather own.

1. Revenue Spiraling Downwards

Insurance companies earn revenue from three primary sources:

• The core insurance business itself, often called underwriting and represented in the income statement as premiums
• Income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities
• Fees from various sources such as policy administration, annuities, or other value-added services

Old Republic International’s demand was weak over the last four years as its revenue fell at a 1.4% annual rate. This wasn’t a great result and is a sign of lacking business quality.

2. Net Premiums Earned Points to Soft Demand

Markets consistently prioritize net premiums earned growth over investment and fee income, recognizing its superior quality as a core indicator of the company’s underwriting success and market penetration.

Old Republic International’s net premiums earned has grown at a 1.6% annualized rate over the last two years, much worse than the broader insurance industry and slower than its total revenue.

3. Recent EPS Growth Below Our Standards

While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.

Old Republic International’s EPS grew at a weak 7% compounded annual growth rate over the last two years. On the bright side, this performance was higher than its 4.1% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.

Final Judgment

Old Republic International isn’t a terrible business, but it isn’t one of our picks. That said, the stock currently trades at 1.5× forward P/B (or $37.13 per share). This multiple tells us a lot of good news is priced in - we think there are better stocks to buy right now. We’d recommend looking at one of our top digital advertising picks.

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