On Aug 27, 2014, Zacks Investment Research downgraded
Old Republic International Corporation
) to a Zacks Rank #4 (Sell).
Why the Downgrade?
Old Republic International has witnessed downward estimate
revisions for 2014 and 2015 following disappointing second quarter
results. Given its expected negative earnings growth rates in the
upcoming quarters, it has more downside left.
Old Republic International's second-quarter earnings missed the
Zacks Consensus by 4% and plunged 64.2% year over year. Total
revenue of $1.3 billion was down 8.7% year over year but came in
line with the Zacks Consensus Estimate.
Results were impacted by higher case settlement and litigation
costs in the consumer credit indemnity ("CCI") portion of the
run-off business. Moreover, intermittent weaknesses in real estate
and mortgage markets also affected the results.
The company is also experiencing softness in its Title Insurance
business in where premium and fees declined 16.5% year over year
for the six months ended Jun 30, 2014, mainly due to a significant
drop in refinance transactions since mid 2013. Moreover, a rise in
mortgage interest rates also ended up in reduced mortgage
extensions, creating further pressure on the segment's top
Old Republic isn't looking too great from an earnings estimate
revision perspective either. The Zacks Consensus Estimate for 2014
has moved down 16.7% to 90 cents over the last 60 days. The same
for 2015 fell 0.9% to $1.09 per share over the same time
Other Stocks to Consider
While Old Republic International's unimpressive Zacks Ranks does
not call for investor attention, some better-ranked stocks in the
industry include American International Group, Inc. (
), BB Seguridade Participa (
) and Fortegra Financial Corp. (
). All these stocks carry a Zacks Rank #2 (Buy).
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