Stewart Information Services (STC): Valuation Check After Discounted Equity Raise and Acquisition Push

Stewart Information Services (STC) just wrapped up a sizable equity raise, selling 1.9 million shares at a discount to bring in roughly $129 million, and potentially more if underwriters exercise their option.

See our latest analysis for Stewart Information Services.

The discounted raise comes after a busy stretch that includes a major acquisition of Mortgage Contracting Services and a conference appearance. The share price return has still climbed meaningfully this year, while multiyear total shareholder returns remain very strong, suggesting momentum is cooling a little rather than breaking.

If this kind of capital raise has you rethinking where the next opportunity might be, it could be worth exploring fast growing stocks with high insider ownership.

With the share price still up year to date and trading only modestly below analyst targets after a hefty equity raise, the key question now is whether Stewart is undervalued or if the market is already pricing in its next leg of growth.

Most Popular Narrative Narrative: 7.3% Undervalued

With Stewart Information Services last closing at $74.19 against a narrative fair value near $80, the story leans toward modest upside rather than exuberance.

The analysts have a consensus price target of $78.5 for Stewart Information Services based on their expectations of its future earnings growth, profit margins and other risk factors. In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.4 billion, earnings will come to $214.5 million, and it would be trading on a PE ratio of 12.3x, assuming you use a discount rate of 6.2%.

Read the complete narrative.

Want to see what kind of earnings surge and margin reset would justify that calmer future multiple on much larger profits? The full narrative unpacks every assumption.

Result: Fair Value of $80 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the housing slump, along with rising data and labor costs, could easily squeeze margins and test whether that projected earnings ramp really materializes.

Find out about the key risks to this Stewart Information Services narrative.

Another Angle on Valuation

While the narrative fair value suggests modest upside, the earnings multiple tells a tougher story. Stewart trades on a 21.8x P/E versus an industry 13.6x, peers at 16.9x, and a fair ratio of 20.2x, pointing to a richer price and less room for error.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Stewart Information Services Narrative

If you want to stress test these assumptions or prefer to rely on your own work, you can build a complete narrative in minutes: Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Stewart Information Services.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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