Stewart Information Services Corp (NYSE: STC)

Sector: Financial Services Industry: Insurance - Property & Casualty CIK: 0000094344
Market Cap 1.84 Bn
P/B 1.52
P/E 6.19
P/S 0.61
ROIC (Qtr) 5.83
Div Yield % 2.62
Rev 1y % (Qtr) 19.31
Total Debt (Qtr) 571.11 Mn
Debt/Equity (Qtr) 0.39
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About

Stewart Information Services Corporation, often referred to as Stewart, is a well-established player in the title insurance and real estate services industry. The company, founded in 1893 and headquartered in Houston, Texas, has a significant presence not only in the United States but also in several international markets, including Australia, Canada, the Caribbean, Europe, Mexico, and the United Kingdom. Stewart's operations are diverse and extensive, encompassing a broad spectrum of products and services. These offerings are delivered through...

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Investment thesis

Bull case

  • Operating cash flow of 184.10M provides strong 10.88x coverage of stock compensation 16.93M, indicating sustainable incentive practices.
  • Strong tangible asset base of 1.57B provides 2.75x coverage of total debt 571.11M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 129.23M exceeds capital expenditure of 54.87M by 2.36x, indicating strong organic growth funding capability.
  • Cash position of 188.52M provides exceptional 13.04x coverage of minority interest expenses 14.46M, indicating strong liquidity.
  • Operating cash flow of 184.10M provides strong 4.89x coverage of tax liabilities 37.62M, showing excellent fiscal position.

Bear case

  • Operating cash flow of 184.10M barely covers its investment activities of (107.72M), with a coverage ratio of -1.71, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 184.10M provides thin coverage of dividend payments of (56.50M) with a -3.26 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 188.52M provide limited coverage of acquisition spending of (38.55M), which is -4.89x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 129.23M represents just -1076.88x of debt issuance (120000), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating earnings of 154.71M show weak coverage of depreciation charges of 61.41M, with a 2.52 ratio indicating high capital intensity and potential reinvestment needs.

Segments Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Insurance - Property & Casualty
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 PGR Progressive Corp/Oh/ 121.46 Bn 30.80 3.11 6.90 Bn
2 CB Chubb Ltd 109.27 Bn 36.88 5.64 21.01 Bn
3 ALL Allstate Corp 69.21 Bn 29.01 1.62 8.09 Bn
4 TRV Travelers Companies, Inc. 67.61 Bn 10.75 1.38 9.27 Bn
5 HIG Hartford Insurance Group, Inc. 61.19 Bn 37.09 3.27 4.37 Bn
6 WRB Berkley W R Corp 38.52 Bn 124.63 8.69 2.87 Bn
7 CINF Cincinnati Financial Corp 26.91 Bn 74.14 6.73 0.88 Bn
8 MKL Markel Group Inc. 26.46 Bn 13.00 1.68 4.28 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.59 0.50
EV to Cash from Ops. EV/CFO 4.31 -16.03
EV to Debt EV to Debt 2.96 11.42
EV to EBIT EV/EBIT 4.34 22.13
EV to EBITDA EV/EBITDA 4.28 17.53
EV to Free Cash Flow [EV/FCF] EV/FCF 4.54 68.07
EV to Market Cap EV to Market Cap 0.92 0.91
EV to Revenue EV/Rev 0.56 2.31
Price to Book Value [P/B] P/B 1.52 2.97
Price to Earnings [P/E] P/E 6.19 29.62
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.81 7.41
Dividend Payout Ratio % Div Payout % (Qtr) 55.50 19.66
Dividend per Basic Share Div per Share (Qtr) 2.03 1.49
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 43.88 37.69
Interest Coverage Int. cover (Qtr) 7.75 -9.19
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -49.58 -17.83
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 2.58 30.27
Dividend Growth (1y) % Div 1y % (Qtr) 5.19 16.34
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 59.35 62.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 32.89 35.62
EBIT Growth (1y) % EBIT 1y % (Qtr) 50.52 56.25
EBT Growth (1y) % EBT 1y % (Qtr) 62.24 52.70
EPS Growth (1y) % EPS 1y % (Qtr) 68.98 48.20
FCF Growth (1y) % FCF 1y % (Qtr) 83.47 15.47
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 21.77 16.55
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.98 0.38
Cash Payout Ratio Cash Payout (Qtr) 0.24 0.45
Cash Ratio Cash Ratio 0.00 0.02
Current Ratio Current Ratio 0.00 0.06
Debt to Equity Ratio Debt/Equity (Qtr) 0.39 0.23
Interest Cover Ratio Int Coverage (Qtr) 7.75 -9.19
Times Interest Earned Times Interest Earned (Qtr) 7.75 -9.19
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.80 14.01
EBIT Margin % EBIT Margin % (Qtr) 5.56 13.05
EBT Margin % EBT Margin % (Qtr) 4.85 12.25
Gross Margin % Gross Margin % (Qtr) 32.10 40.49
Net Profit Margin % Net Margin % (Qtr) 3.70 9.63