Sign in

You're signed outSign in or to get full access.

SI

STEWART INFORMATION SERVICES CORP (STC)·Q3 2025 Earnings Summary

Executive Summary

  • STC delivered solid Q3 2025 results: total revenues up 19% year over year to $796.9M, adjusted to $791.3M; GAAP diluted EPS $1.55 and adjusted EPS $1.64 .
  • Title segment led performance (operating revenues +19% YoY to $659.9M; adjusted pretax margin 9.0%), driven by agency (+28% gross) and continued commercial strength (domestic +17% YoY) .
  • Employee cost ratio improved to 27.2% of revenues (vs. 29.8% LY) and title loss ratio fell to 3.0% (vs. 3.8% LY), supporting margin expansion (adjusted pretax margin 8.1% vs. 7.1% LY) .
  • Results beat S&P Global consensus: revenue $796.9M vs. $608.2M*, adjusted EPS $1.64 vs. $1.38* (both based on a single estimate), positioning FY models for upward revisions (see Estimates Context) .
  • Catalysts: sustained commercial pipeline breadth, agency share gains in target states (FL/TX/NY), RES margins normalizing to low-teens, and a dividend increase to $2.10 annualized beginning with the Sept. 2025 payment .

What Went Well and What Went Wrong

What Went Well

  • Commercial momentum across asset classes (energy, data centers, hospitality, self-storage); domestic commercial revenues +17% YoY; “pipeline is good” into Q4 .
  • Agency growth and share gains: gross agency revenues +28% YoY; management cited ~16.5% growth in targeted states and ~40% commercial growth in the agency channel .
  • Cost and risk metrics improved: employee cost ratio down to 27.2% (from 29.8% LY) and title loss ratio at 3.0% (from 3.8% LY), aiding margin expansion .

Selected quotes:

  • “I am proud of our third quarter results as they demonstrate our momentum… deliver solid third quarter results, even as the broad housing environment remains subdued” — CEO Fred Eppinger .
  • “Adjusted pre-tax margin improved to 9% compared to 7.7% last year” — CFO David Hisey on the title segment .
  • “We grew domestic commercial revenues by 17% in the quarter… we have grown domestic commercial revenues by 33% [YTD]” — CEO Fred Eppinger .

What Went Wrong

  • RES margins still below prior-year levels: adjusted RES pretax margin 11.3% vs. 13.4% LY; management attributes early-year margin pressure to higher third-party data costs, now recaptured in contracts .
  • Investment income variability: CFO noted sensitivity to rate cuts (escrow balances in short-term instruments), expecting interest income to be “more consistent… slightly down” depending on balances and cuts .
  • Title adjusted pretax margin improved YoY but remains cyclical; direct operations still exposed to subdued housing activity despite sequential gains .

Financial Results

Sequential Performance (Q1–Q3 2025)

MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($USD Millions)$612.0 $722.2 $796.9
Net Income Attributable to Stewart ($USD Millions)$3.1 $31.9 $44.3
Diluted EPS (GAAP) ($)$0.11 $1.13 $1.55
Adjusted Diluted EPS ($)$0.25 $1.34 $1.64
Pretax Margin (%)1.0% 6.5% 7.7%
Adjusted Pretax Margin (%)1.8% 7.6% 8.1%

Year-over-Year (Q3 2024 vs. Q3 2025)

MetricQ3 2024Q3 2025
Total Revenues ($USD Millions)$667.9 $796.9
Adjusted Total Revenues ($USD Millions)$663.2 $791.3
Diluted EPS (GAAP) ($)$1.07 $1.55
Adjusted Diluted EPS ($)$1.17 $1.64
Title Loss Ratio (%)3.8% 3.0%
Employee Costs (% of Total Operating Revenues)29.8% 27.2%

Q3 2025 vs. S&P Global Consensus

MetricConsensusActual
Revenue ($USD Millions)$608.2*$796.9
Adjusted Diluted EPS ($)$1.38*$1.64
# of Estimates1*—

Values marked with * were retrieved from S&P Global.

Segment Breakdown

SegmentMetricQ2 2025Q3 2025
TitleOperating Revenues ($USD Millions)$592.5 $659.9
TitleAdjusted Pretax Income ($USD Millions)$51.9 $60.8
TitleAdjusted Pretax Margin (%)8.5% 9.0%
Real Estate SolutionsTotal Revenues ($USD Millions)$112.7 $116.6
Real Estate SolutionsAdjusted Pretax Income ($USD Millions) pipeline and office minimal$12.2 $13.2
Real Estate SolutionsAdjusted Pretax Margin (%)10.9% 11.3%

KPIs

KPIQ3 2024Q3 2025
Direct Title Revenues – Domestic Non-Commercial ($USD Millions)$168.2 $176.8
Direct Title Revenues – International Non-Commercial ($USD Millions)$29.0 $32.5
Direct Title Revenues – Domestic Commercial ($USD Millions)$67.4 $79.1
Direct Title Revenues – International Commercial ($USD Millions)$6.1 $11.3
Total Direct Title Revenues ($USD Millions)$270.7 $299.7
Avg Domestic Commercial Fee/File ($)—$17,700
Avg Domestic Residential Fee/File ($)—$3,200
Domestic Orders – Open (Total)87,464 87,403
Domestic Orders – Closed (Total)59,375 59,312

Note: Management stated avg domestic commercial fee per file was “comparable” to prior year; prior-year figure not provided in Q3 2025 release .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Annual Dividend2025$2.00 per share $2.10 per share beginning with Q3 payment (paid Sept 30, 2025) Raised
Title Loss Ratio“Coming period”—Expect 3.5%–4% average going forward New/Clarified
RES Adjusted Pretax MarginOngoing—“Low-teens” normal range; could reach mid-teens (~14–15%) in a ~5M existing-home-sales market Framework Provided
Investment Income (from Escrows)Next 12 months—“More consistent… slightly down,” balancing rate cuts and escrow balances Qualitative Outlook

No formal revenue/EPS guidance was provided in the Q3 materials.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q1 2025)Current Period (Q3 2025)Trend
Housing & RatesNavigating challenging housing market; sequential revenue/earnings improvement in Q2 .More confident next 12 months; rates eased to ~6.35% late Q3; expect gradual improvement into 2026 .Improving tone
Commercial TitleQ1 domestic commercial +39% YoY; Q2 +46% YoY; avg fee/file $16.9K in Q2 .Q3 domestic commercial +17% YoY; broad by asset class; pipeline “good” into Q4 .Strong, normalizing growth rates
Agency ChannelQ2 gross agency +25% with state focus .Q3 +28% gross; ~16.5% growth in targeted states; ~40% commercial growth in agency channel .Accelerating share gains
RES MarginsQ1 impacted by data cost increases; adjusted margin 9.9%; Q2 adjusted margin 10.9% .Q3 adjusted margin 11.3%; expect “low-teens” normal; mid-teens with stronger volumes .Sequential recovery
Investment IncomeQ2 investment income up 14% YoY .Sensitive to rate cuts; expect consistency to slightly down, depends on balances .Cautious
InternationalQ1 volumes up; Canada strength .Q3 total international revenues +25% YoY; focus on Canada and commercial penetration .Growing
Claims/LossesQ2 loss ratio 3.6% .Q3 3.0%; expect 3.5%–4% over time .Favorable but normalizing expected

Management Commentary

  • Strategic focus: “We are committed to growth across all business lines… deliver solid third quarter results, even as the broad housing environment remains subdued” — CEO Fred Eppinger .
  • Title performance: “Adjusted title pre-tax income was $61 million… 40% higher than the prior year quarter. Adjusted pre-tax margin improved to 9% compared to 7.7% last year” — CFO David Hisey .
  • Agency and commercial: “This quarter we saw about a 16.5% growth [in targeted states]… and really good traction on commercial, probably grew commercial 40% in the agency channel” — CEO Fred Eppinger .
  • RES margin normalization: “We had that hiccup… because of… data players… once that works its way into the system, we’ll go back to… low teens margin… mid-teens when the market comes back” — CEO Fred Eppinger .

Q&A Highlights

  • Agent premiums and share gains: Management highlighted ~16.5% growth in targeted states and ~40% commercial growth in the agency channel, driven by better service/technology and broader commercial capabilities beyond New York .
  • Commercial pipeline: Pipeline described as “good” into year-end; office remains less of a growth contributor, while most other asset classes show strength .
  • Investment income sensitivity: Short‑term rate cuts can pressure investment income, though balances have partially offset; outlook “more consistent… slightly down” depending on balances vs. rates .
  • RES margin path: Low‑teens “normal” margin expected post data cost resets; mid‑teens potential with volume normalization (linked to ~5M existing home sales environment) .

Estimates Context

  • Q3 2025 actuals vs. S&P Global consensus: revenue $796.9M vs. $608.2M*; adjusted EPS $1.64 vs. $1.38* (both with 1 estimate)*, indicating meaningful beats likely to prompt upward revisions to near‑term models .
  • The breadth of outperformance (agency +28% gross, domestic commercial +17% YoY, cost/claims ratios better) suggests consensus may need to reflect higher volume assumptions and margin progression in Title and RES .

Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

  • Title outperformance continues: +19% YoY operating revenues with adjusted title pretax margin up to 9.0%; favorable loss ratio (3.0%) and lower employee cost ratio support durability .
  • Commercial breadth and agency share gains are the near‑term growth engines; management indicates a healthy Q4 pipeline and continued share shift in targeted states .
  • RES margin recovery is on track, back to low‑teens with upside as market volumes normalize; this should add leverage to the consolidated margin profile into 2026 .
  • Investment income could be a mild headwind if rates fall faster than escrow balances grow; monitor rate path vs. order flow/balances .
  • Capital return stepped up with the dividend raised to $2.10 annualized, underpinned by stronger cash generation (Q3 operating cash flow $92.6M) .
  • Against a subdued housing backdrop, the company’s execution (agency/commercial/RES) and cost discipline are driving sustained revenue and EPS growth, supporting a positive estimate revision cycle (see beats vs. consensus)* .

Appendix: Additional Data Points

  • Operating cash flow Q3 2025: $92.6M vs. $76.1M LY .
  • Balance sheet strength: book value per share $52.58; total stockholders’ equity ~$1.48B; line of credit upsized to $300M and fully available .
  • Non‑GAAP adjustments Q3: $5.6M net realized/unrealized gains (notably equity securities FV), $8.5M acquired intangible amortization; adjusted pretax margin 8.1% .