Why Stewart Information Services (STC) Stock Is Up Today

Stewart Information Services trades at $70.27 and has moved in lockstep with the market. Its shares have returned 7.9% over the last six months while the S&P 500 has gained 11.3%.

Is there a buying opportunity in Stewart Information Services, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free for active Edge members.

Why Is Stewart Information Services Not Exciting?

We're cautious about Stewart Information Services. Here are three reasons why STC doesn't excite us and a stock we'd rather own.

1. Net Premiums Earned Point to Soft Demand

Insurers sell policies then use reinsurance (insurance for insurance companies) to protect themselves from large losses. Net premiums earned are therefore what's collected from selling policies less what’s paid to reinsurers as a risk mitigation tool.

Stewart Information Services’s net premiums earned has grown at a 2.9% annualized rate over the last five years, much worse than the broader insurance industry and slower than its total revenue.

2. EPS Trending Down

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Sadly for Stewart Information Services, its EPS declined by 2.8% annually over the last five years while its revenue grew by 6.3%. This tells us the company became less profitable on a per-share basis as it expanded.

3. Substandard BVPS Growth Indicates Limited Asset Expansion

In the insurance industry, book value per share (BVPS) provides a clear picture of shareholder value, as it represents the total equity backing a company’s insurance operations and growth initiatives.

Although Stewart Information Services’s BVPS increased by 8.3% annually over the last five years, growth has recently decelerated to a sluggish 3.2% over the past two years (from $49.42 to $52.59 per share).

Final Judgment

Stewart Information Services isn’t a terrible business, but it doesn’t pass our quality test. That said, the stock currently trades at 1.3× forward P/B (or $70.27 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere. We’d suggest looking at one of our top software and edge computing picks.

Earnings results often indicate what direction a company will take in the months ahead. With Q3 behind us, let’s have a look at Stewart Information Services and its peers.

Property & Casualty (P&C) insurers protect individuals and businesses against financial loss from damage to property or from legal liability. This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. On the other hand, P&C insurers face a major secular headwind from the increasing frequency and severity of catastrophe losses due to climate change. Furthermore, the liability side of the business is pressured by 'social inflation'—the trend of rising litigation costs and larger jury awards.

The 33 property & casualty insurance stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 14.7%.

Thankfully, share prices of the companies have been resilient as they are up 5.4% on average since the latest earnings results.

Stewart Information Services

Founded in 1893 during America's westward expansion when property records were often disputed, Stewart Information Services provides title insurance and real estate services, helping homebuyers, sellers, and lenders verify property ownership and protect against title defects.

Stewart Information Services reported revenues of $796.9 million, up 19.3% year on year. This print exceeded analysts’ expectations by 31%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ revenue and EPS estimates.

"I am proud of our third quarter results as they demonstrate our momentum," commented Fred Eppinger, chief executive officer.

Unsurprisingly, the stock is down 6.4% since reporting and currently trades at $70.27.

Best Q3: Root

Pioneering a data-driven approach that rewards good driving habits, Root is a technology-driven auto insurance company that uses mobile apps to acquire customers and data science to price policies based on individual driving behavior.

Root reported revenues of $387.8 million, up 26.9% year on year, outperforming analysts’ expectations by 4.5%. The business had an incredible quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ net premiums earned estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 19.7% since reporting. It currently trades at $71.87.

Weakest Q3: Progressive

Starting as a small auto insurance company in 1937 with a pioneering focus on high-risk drivers, Progressive is a major auto, property, and commercial insurance provider that offers policies through independent agents, online platforms, and over the phone.

Progressive reported revenues of $22.51 billion, up 14.2% year on year, in line with analysts’ expectations. It was a softer quarter as it posted a significant miss of analysts’ EPS estimates and a miss of analysts’ book value per share estimates.

As expected, the stock is down 4.3% since the results and currently trades at $230.10.

Read our full analysis of Progressive’s results here.

First American Financial

Tracing its roots back to 1889 when California was experiencing its first major real estate boom, First American Financial provides title insurance, settlement services, and risk solutions for residential and commercial real estate transactions across the United States and internationally.

First American Financial reported revenues of $1.98 billion, up 40.7% year on year. This print surpassed analysts’ expectations by 6.2%. Overall, it was a stunning quarter as it also logged an impressive beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.

The stock is up 1.1% since reporting and currently trades at $62.06.

Read our full, actionable report on First American Financial here, it’s free for active Edge members.

Trupanion

Born from a vision to help pet owners avoid economic euthanasia when faced with expensive veterinary bills, Trupanion provides medical insurance for cats and dogs through data-driven, vertically-integrated products priced specifically for each pet's unique characteristics.

Trupanion reported revenues of $366.9 million, up 12.1% year on year. This number beat analysts’ expectations by 1.3%. It was an exceptional quarter as it also produced a beat of analysts’ EPS estimates and a solid beat of analysts’ book value per share estimates.

The stock is down 9.4% since reporting and currently trades at $38.14.

Read our full, actionable report on Trupanion here, it’s free for active Edge members.

What Happened?

A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official hinted at potential interest rate cuts in the near future. New York Federal Reserve President John Williams stated he sees "room for a further adjustment in the near term" to U.S. monetary policy, signaling to investors that a rate cut could be forthcoming. Speaking at a conference, Williams noted that policy is currently "modestly restrictive" and could be moved closer to a neutral stance. The market reacted swiftly to the news, as lower interest rates have been a primary driver of stock market gains. Following the remarks, the probability of a 25-basis-point rate cut rose significantly, according to CME's FedWatch tool. For financial companies, lower rates can increase the value of their large bond portfolios and stimulate broader economic activity.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Property & Casualty Insurance company Stewart Information Services jumped 4.2%. Is now the time to buy Stewart Information Services? Access our full analysis report here, it’s free for active Edge members.
• Property & Casualty Insurance company Bowhead Specialty jumped 4%. Is now the time to buy Bowhead Specialty? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Stewart Information Services (STC)

Stewart Information Services’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 29 days ago when the stock dropped 4.1% on the news that the company reported third-quarter results that beat analyst expectations, as investors appeared to look past the headline numbers and focus on weaker long-term trends. 

The insurance provider posted revenue of $776.5 million, up 16.3% year-on-year and significantly ahead of Wall Street's estimates. Its earnings per share also increased to $1.55 from $1.07 in the same quarter last year. However, despite the strong quarter, the company's longer-term performance likely gave investors pause. Over the last five years, Stewart's revenue growth has been described as mediocre, and its earnings per share have declined annually during that period. Furthermore, the company's book value per share growth, a key metric for insurers, has decelerated in the last two years. This suggests the solid quarterly performance was not enough to outweigh concerns about the underlying health and long-term trajectory of the business, prompting a sell-off.

Stewart Information Services is up 13.2% since the beginning of the year, and at $74.54 per share, it is trading close to its 52-week high of $77.18 from December 2024. Investors who bought $1,000 worth of Stewart Information Services’s shares 5 years ago would now be looking at an investment worth $1,673.

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at insurance stocks, starting with Kemper .

The insurance industry absorbs and diversifies risk, providing financial protection against unforeseen life, health, property, and liability events. Profits come from underwriting—collecting more in premiums than paid in claims—and investing the 'float'. This cyclical industry benefits from 'hard markets' with strong pricing power and higher interest rates that enhance investment income. AI adoption is improving underwriting through sophisticated data analysis and reducing costs via automation. However, 'soft markets' and low rates create headwinds, while the industry faces elevated claims costs from climate catastrophes, inflation, and rising litigation expenses.

The 57 insurance stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 3.8%.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

Kemper

Originally known as Unitrin until rebranding in 2011, Kemper is an insurance holding company that provides automobile, homeowners, life, and other insurance products to individuals and businesses across the United States.

Kemper reported revenues of $1.24 billion, up 4.8% year on year. This print exceeded analysts’ expectations by 1.5%. Despite the top-line beat, it was still a softer quarter for the company with a significant miss of analysts’ EPS and book value per share estimates.

“Our results for the quarter were disappointing and below our expectations,” said C. Thomas Evans, Jr., Interim CEO.

Unsurprisingly, the stock is down 13.9% since reporting and currently trades at $36.70.

Read our full report on Kemper here, it’s free for active Edge members.

Best Q3: Hamilton Insurance Group

Founded in 2013 and operating through three distinct underwriting platforms across four countries, Hamilton Insurance Group operates global specialty insurance and reinsurance platforms across Lloyd's, Ireland, Bermuda, and the United States.

Hamilton Insurance Group reported revenues of $667.7 million, up 30.2% year on year, outperforming analysts’ expectations by 10.3%. The business had an incredible quarter with a beat of analysts’ EPS and revenue estimates.

The market seems happy with the results as the stock is up 10.3% since reporting. It currently trades at $26.01.

Is now the time to buy Hamilton Insurance Group? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Brighthouse Financial

Spun off from MetLife in 2017 to focus specifically on retail financial products, Brighthouse Financial provides annuity contracts and life insurance products designed to help individuals protect wealth, generate income, and transfer assets.

Brighthouse Financial reported revenues of $2.17 billion, flat year on year, falling short of analysts’ expectations by 4%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and net premiums earned estimates.

The stock is flat since the results and currently trades at $65.54.

Read our full analysis of Brighthouse Financial’s results here.

Stewart Information Services

Founded in 1893 during America's westward expansion when property records were often disputed, Stewart Information Services provides title insurance and real estate services, helping homebuyers, sellers, and lenders verify property ownership and protect against title defects.

Stewart Information Services reported revenues of $796.9 million, up 19.3% year on year. This result beat analysts’ expectations by 31%. Overall, it was a stunning quarter as it also logged an impressive beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.

The stock is down 5.1% since reporting and currently trades at $71.25.

Read our full, actionable report on Stewart Information Services here, it’s free for active Edge members.

Assured Guaranty

Serving as a financial safety net for over $11 trillion in debt service payments since its founding in 2003, Assured Guaranty provides credit protection products that guarantee scheduled payments on municipal bonds, infrastructure projects, and structured finance obligations.

Assured Guaranty reported revenues of $207 million, down 23% year on year. This print surpassed analysts’ expectations by 12.2%. It was an incredible quarter as it also put up a beat of analysts’ EPS estimates and a solid beat of analysts’ revenue estimates.

The stock is up 8.1% since reporting and currently trades at $88.09.

Read our full, actionable report on Assured Guaranty here, it’s free for active Edge members.