Critical Survey: Stewart Information Services (NYSE:STC) versus Root (NASDAQ:ROOT)

Stewart Information Services (NYSE:STC) and Root (NASDAQ:ROOT) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, valuation, earnings and profitability.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Stewart Information Services and Root, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stewart Information Services	0	1	4	0	2.80
Root	0	5	2	0	2.29

Stewart Information Services presently has a consensus price target of $81.67, suggesting a potential upside of 23.62%. Root has a consensus price target of $93.20, suggesting a potential upside of 66.67%. Given Root’s higher probable upside, analysts plainly believe Root is more favorable than Stewart Information Services.

Risk & Volatility

Stewart Information Services has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500. Comparatively, Root has a beta of 2.87, meaning that its stock price is 187% more volatile than the S&P 500.

Insider and Institutional Ownership

96.9% of Stewart Information Services shares are held by institutional investors. Comparatively, 59.8% of Root shares are held by institutional investors. 2.9% of Stewart Information Services shares are held by insiders. Comparatively, 12.0% of Root shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Stewart Information Services and Root”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stewart Information Services	$2.92 billion	0.69	$115.54 million	$4.48	14.75
Root	$1.52 billion	0.58	$40.30 million	$3.34	16.74

Stewart Information Services has higher revenue and earnings than Root. Stewart Information Services is trading at a lower price-to-earnings ratio than Root, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Stewart Information Services and Root’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stewart Information Services	4.19%	10.07%	5.17%
Root	3.58%	19.97%	3.39%

Summary

Stewart Information Services beats Root on 9 of the 14 factors compared between the two stocks.

About Stewart Information Services

Stewart Information Services Corporation, through its subsidiaries, provides title insurance and real estate transaction related services in the United States and internationally. The company involves in searching, examining, closing, and insuring the condition of the title to real property. It also offers home and personal insurance services; services for tax-deferred exchanges; and digital customer engagement platform services. It also provides appraisal management, online notarization and closing, credit and real estate information, and search and valuation services. The company serves homebuyers and sellers, residential and commercial real estate professionals, mortgage lenders and servicers, title agencies and real estate attorneys, and home builders through direct operations, network of independent agencies, and other businesses. The company was founded in 1893 and is headquartered in Houston, Texas.

About Root

Root, Inc. provides insurance products and services in the United States. The company offers automobile, homeowners, and renters insurance products. It operates a direct-to-consumer model; and serves customers primarily through mobile applications, as well as through its website. The company's direct distribution channels also cover digital, media, and referral channels, as well as distribution partners and agencies. Root, Inc. was incorporated in 2015 and is headquartered in Columbus, Ohio.