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Old Republic International Corporation (NYSE:ORI), which is in the insurance business, and is based in United States, saw a decent share price growth in the teens level on the NYSE over the last few months. As a US$6.8b market cap stock, it seems odd Old Republic International is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Old Republic International’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What’s the opportunity in Old Republic International?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 4.0% below my intrinsic value, which means if you buy Old Republic International today, you’d be paying a fair price for it. And if you believe that the stock is really worth $23.88, then there’s not much of an upside to gain from mispricing. What’s more, Old Republic International’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Old Republic International?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with a relatively muted profit growth of 0.8% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Old Republic International, at least in the short term.
What this means for you:
Are you a shareholder? ORI’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on ORI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Old Republic International. You can find everything you need to know about Old Republic International in the latest infographic research report. If you are no longer interested in Old Republic International, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.