ORI

We rate OLD REPUBLIC INTERNATIONAL CORP (ORI) as a Reduce with a composite score of 45.9/100 at a current price of $41.98. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (66th percentile) and value (57th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (32th percentile) and quality (33th percentile) tempers our overall conviction. We assign a Narrow Moat rating (48/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

OLD REPUBLIC INTERNATIONAL CORP holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 45.9/100 places it at rank #2639 in our full 7,333-stock universe. With a $10.6B market capitalization, OLD REPUBLIC INTERNATIONAL CORP operates at meaningful scale within the Finance, Insurance, And Real Estate sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 30%, though momentum at the 53th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 0% (-76.5pp vs sector) narrow to operating margins of 15% (-2.2pp vs sector) and net margins of 11.8%, yielding a gross-to-net conversion rate of N/A%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $41.98, OLD REPUBLIC INTERNATIONAL CORP is trading near fair value based on current fundamentals. Our value factor score of 57/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 9.5x (a 21% discount to the sector median of 11.9x), EV/EBITDA of 7.5x (near the sector median), P/B of 1.6x, P/S of 1.1x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Medium uncertainty rating to OLD REPUBLIC INTERNATIONAL CORP. The stock presents a balanced risk profile: significant leverage (370% debt-to-equity) and weak quality scores (33th percentile). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (370% debt-to-equity); weak quality scores (33th percentile); low beta of 0.41 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 66th percentile and quality factor at the 33th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (66th percentile) suggests predictable business dynamics; a 7.38% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate OLD REPUBLIC INTERNATIONAL CORP's capital allocation as Poor. Key concerns include elevated leverage (370% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — OLD REPUBLIC INTERNATIONAL CORP significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, OLD REPUBLIC INTERNATIONAL CORP receives a Reduce rating with a composite score of 45.9/100 (rank #2639 of 7,333). Our quantitative framework assigns a Narrow Moat (48/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 48/100.

Our analysis does not support a constructive view on OLD REPUBLIC INTERNATIONAL CORP at this time. The combination of the current quantitative profile, medium uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.