Here's Why We Think Stewart Information Services (NYSE:STC) Is Well Worth Watching

Simply Wall St
·3 min read

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.

In contrast to all that, I prefer to spend time on companies like Stewart Information Services (NYSE:STC), which has not only revenues, but also profits. Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

View our latest analysis for Stewart Information Services

How Fast Is Stewart Information Services Growing Its Earnings Per Share?

Over the last three years, Stewart Information Services has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. Thus, it makes sense to focus on more recent growth rates, instead. Like a firecracker arcing through the night sky, Stewart Information Services's EPS shot from US$4.46 to US$10.04, over the last year. You don't see 125% year-on-year growth like that, very often. That could be a sign that the business has reached a true inflection point.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Stewart Information Services shareholders can take confidence from the fact that EBIT margins are up from 8.5% to 13%, and revenue is growing. Ticking those two boxes is a good sign of growth, in my book.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

earnings-and-revenue-history
earnings-and-revenue-history

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Stewart Information Services.

Are Stewart Information Services Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. So it is good to see that Stewart Information Services insiders have a significant amount of capital invested in the stock. Indeed, they hold US$23m worth of its stock. That's a lot of money, and no small incentive to work hard. Even though that's only about 1.5% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

Is Stewart Information Services Worth Keeping An Eye On?

Stewart Information Services's earnings have taken off like any random crypto-currency did, back in 2017. That sort of growth is nothing short of eye-catching, and the large investment held by insiders certainly brightens my view of the company. At times fast EPS growth is a sign the business has reached an inflection point; and I do like those. So to my mind Stewart Information Services is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. Even so, be aware that Stewart Information Services is showing 1 warning sign in our investment analysis , you should know about...

Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like to check out companies that do have those features. You can access a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting

Recommended Stories

  • Why Bitcoin, Ethereum, and Dogecoin Are All Soaring Today

    Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE) are up 6.82%, 8.16%, and 8.36% in the past 24 hours. Earlier in the day, Coinbase Global (NASDAQ: COIN), the second-largest cryptocurrency exchange in the world, announced it would be adding $500 million worth of cryptocurrency to its balance sheet. Coinbase stock is also up 3.10% to $255.98 per share in the same period.

  • 10 Best Dividend Stocks with Over 5% Yield According to Hedge Funds

    In this article, we will be taking a look at the 10 best dividend stocks with over 5% yield according to hedge funds. To skip our detailed analysis of dividend investing, you can go directly to see the 5 Best Dividend Stocks with Over 5% Yield According to Hedge Funds. As the COVID-19 pandemic continues […]

  • Billionaire John Paulson Goes Big on These 2 High-Yield Dividend Stocks

    Every retail investor wants to ensure a solid portfolio return. The only question is, how? The stock market produces a vast mine of data, that by its nature forms a barrier to access. Some investors take a path of low resistance, and follow one or more market legends. These legends are the giants of the investing world, people like John Paulson. Paulson got his start in hedge management in 1994 with $2 million worth of initial capital. He was successful, and by 2003 he was managing $300 million

  • 4 Stocks Billionaires Bought Hand Over Fist in the Second Quarter

    Earlier this week marked the deadline for institutional investment firms, hedge funds, and the ultra-rich to file Form 13F with the Securities and Exchange Commission (SEC). Although it's a dated snapshot that can be at least six weeks old at the time of the SEC filing, it still provides insight into the stocks and trends billionaire money managers might be chasing or shying away from. After poring over 13F data from aggregator WhaleWisdom.com, it became plainly evident that growth stocks were still very much on the minds of billionaire money managers.

  • Mexican Peso Looks to Regain Its Crown as Carry Trade King

    (Bloomberg) -- Even as some emerging-market peers ramp up interest rates amid resurgent global inflation, Mexico is vying to regain its crown as the king of carry.While policy makers in Mexico have lagged behind their counterparts in Brazil, Russia and Turkey in raising borrowing costs, the peso remains attractive because of its stability, a major demand of any investor eking out small returns by borrowing in one currency and lending in another.One-month implied volatility on the peso fell to it

  • These 3 Dividend ETFs Are a Retiree's Best Friend

    Income-seeking investors don't have to mess with a bunch of individual stocks to build a diversified dividend portfolio. A couple of different funds could do the trick in a snap.

  • Eisner Outflanked by Fanatics as $600 Million Payday Foiled by MLB Players

    It’s as if Mickey Mouse packed up and made camp over at Universal. Or maybe worse. Dealmaker Michael Eisner’s latest trophy project was dealt a huge blow when the MLB Players Association decided not to renew its deal with Topps and instead team with Fanatics to offer licensed trading cards starting in 2026. Baseball and […]

  • Ark’s Cathie Wood says stock market ‘couldn’t be further away from a bubble.’ Here’s why.

    Star investor Cathie Wood, who runs a suite of popular ETFs in Ark Investment Management, says that there's no reason to fear that the market is becoming too bubblicious.

  • MLB, Players Ending Topps Card Deal for Fanatics Joint Venture

    Major League Baseball and the MLB Players Association are set to make a massive lineup change—ending an 70-year partnership with Topps to work with Fanatics on licensed trading cards starting in 2026. Topps has been producing baseball cards since 1951, and received an exclusive license from MLB in 2009. That agreement was later extended through […]

  • This record-breaking figure is now the average 401(k) balance

    If you want to see the benefits of saving early for your retirement and saving with regularity, look no further than the latest report from 401(k) giant Fidelity Investments. The average 401(k) account now has a record balance of $129,300, the company says. Fidelity calculates that even millennials who’ve held their 401(k)s for at least 15 years now have an average balance of just under $280,000.

  • Thailand CBDC Trial to Test Use as Cash Substitute

    The CBDC will be used for "cash-like activities within a limited scale," such as paying for goods and services.

  • Why Jim Cramer Is Urging Investors Not To Sell Ford Stock

    Ford Motor Co (NYSE: F) has traded down to its lowest levels since May, but Jim Cramer urged investors not to sell Ford stock. As chip shortage issues continue to impact the automotive industry, Cramer said there are many things that are going well for Ford that investors should pay attention to. See Also: Ford Stock Breaks Critical Level "There are so many things that are going good at Ford including all new models and a decision to no longer lose money in a lot of different places," Cramer sai

  • 10 Best Stocks to Buy According to Michael Burry

    In this article, we discuss the 10 best stocks to buy according to Michael Burry. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Stocks to Buy According to Michael Burry. Michael Burry, the chief of California-based Scion Asset Management, manages more than $2 billion in assets […]

  • 10 Best Stocks to Buy According to Warren Buffett

    In this article, we discuss the 10 best stocks to buy according to Warren Buffett. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Stocks to Buy According to Warren Buffett. Warren Buffett, the chief of Nebraska-based Berkshire Hathaway, is one of the most successful investors in […]

  • 2 Growth Stocks With 83% to 116% Upside, According to Wall Street

    Famed investor Benjamin Graham once made an interesting observation: "In the short term, the market is a voting machine; but in the long run, it is a weighing machine." Put another way, a stock's price on any given day is heavily influenced by its popularity, but the underlying fundamentals ultimately matter more over time.

  • Zambia Election Euphoria Fuels Kwacha’s World-Beating Streak

    (Bloomberg) -- Zambia’s kwacha extended its gains versus the dollar, making it the world’s best-performing currency since Hakainde Hichilema was announced the winner of the Aug. 12 presidential vote. The kwacha has appreciated by 7.8% this week to 17.92 per dollar, the best performance out of more than 140 currencies tracked by Bloomberg globally and on track for the strongest close since May 2020. The southern African nation’s $1 billion Eurobonds due 2024 advanced for a fourth straight day to

  • This Is the Only Chinese Stock I Would Buy Right Now

    111 (NASDAQ: YI) is a severely undervalued telepharmacy that is rapidly expanding across all of China. It is quite obvious investors are heavily discounting its potential as part of a broad sell-off in Chinese stocks due to fears of regulatory crackdowns. 111 is currently the biggest telepharmacy in China, surpassing both Alibaba Group Holding subsidiary Ali Health and JD.com's JD Health International.

  • Options Trader Takes Massive Position In Virgin Galactic Stock: Where Is It Headed?

    On Aug. 12, Sir Richard Branson’s Virgin Investments dumped $300 million worth of Virgin Galactic Holdings, Inc (NYSE: SPCE) stock. The billionaire said the proceeds from the sale would go toward helping his other businesses recover from the COVID-19 pandemic. The day prior to Branson selling 10,416,000 shares of his space tourism company, Morgan Stanley analyst Kristine Liwag downgraded the stock from Equal-weight to Underweight and gave a $25 price target. Although Unity23 is expected to fly t

  • ‘The Next Amazon’: 10 Undervalued Ecommerce Stocks with Huge Upside

    In this article, we discuss the 10 undervalued ecommerce stocks with huge upside. If you want to skip our detailed analysis of these stocks, go directly to ‘The Next Amazon’: 5 Undervalued Ecommerce Stocks with Huge Upside. The ecommerce business has become one of the main drivers of the world economy in recent years. According […]

  • 3 Shockingly Cheap Dividend Stocks

    Values can be hard to find on the stock market, especially after the rally we've had since early 2020. Procter & Gamble was a strong business before the pandemic struck, and it has only boosted its value since then.