Tuesday, March 4, 2014

ITIC Reports Decline in Q4

Price$ 79.90
Market Cap$ 163.00 M
P/E TTM11.1 x
Div yield0.4 %
ROE11.5 %
Investors Title Insurance Company (ITIC) reported year end earnings that were lower than expected due to disappointing Q4 results. Premium revenue dropped by about one million yoy, or 3% of total. This along with about another million drop in realized investment gains meant Q4 net income was $1.8 million versus $3.2 million a year earlier. Note, however, that a year ago interest rates were at record lows.

Still, for the entire year, revenue was up 12% yoy. Earnings was up 34% yoy. The stock has dropped a few percent since I bought it two months ago. It went down as much as 10%. I do not regret owning it. But of course I wish I had slowly accumulated to take advantage of the dips instead of buying it all at once.

The recent results show that ITIC had a good recent run due to the low interest rates. Banks require title insurance when purchasing and when refinancing. So title insurance companies get a cut of each mortgage transaction! Even though refinancing activity may slow due to rising rates, I feel housing is bound to pick up in the coming years. Single home sales are about one million below what I would consider normal for the current population.

ITIC is also a balance sheet play. ITIC's most important metric to me is the book value, and it increased 12% yoy.

No comments:

Post a Comment