Stewart Information Services Corporation (NYSE:STC) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year’s forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investors have been pretty optimistic on Stewart Information Services too, with the stock up 12% to US$42.11 over the past week. We’ll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the latest upgrade, Stewart Information Services’ twin analysts currently expect revenues in 2020 to be US$2.0b, approximately in line with the last 12 months. Statutory earnings per share are anticipated to decline 18% to US$3.66 in the same period. Prior to this update, the analysts had been forecasting revenues of US$1.8b and earnings per share (EPS) of US$2.05 in 2020. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
See our latest analysis for Stewart Information Services
With these upgrades, we’re not surprised to see that the analysts have lifted their price target 38% to US$45.50 per share. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Stewart Information Services, with the most bullish analyst valuing it at US$47.00 and the most bearish at US$44.00 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing that stands out from these estimates is that shrinking revenues are expected to moderate from the historical decline of 1.2% per annum over the past five years.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Stewart Information Services.
Analysts are clearly in love with Stewart Information Services at the moment, but before diving in – you should be aware that we’ve identified some warning flags with the business, such as recent substantial insider selling. You can learn more, and discover the 2 other warning signs we’ve identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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. 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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