Title insurance provider Stewart Information Services (NYSE: STC) announced better-than-expected revenue in Q2 CY2025, with sales up 19.9% year on year to $722.2 million. Its non-GAAP profit of $1.34 per share was 13.6% above analysts’ consensus estimates.

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StockStory’s Take

Stewart Information Services delivered a quarter that surpassed Wall Street’s expectations, with management attributing the results to strong momentum in commercial and agency services businesses despite a challenging housing market. CEO Frederick Eppinger pointed to a 20% revenue increase and a 48% rise in adjusted earnings per share, crediting targeted investments in talent, expansion in small commercial, and geographic diversification. Eppinger highlighted, “Inventories have improved in volume and quality over the past several months, which could be a precursor to some improvement in the market,” while also noting that the spring selling season was muted and homes were sitting longer, reflecting ongoing affordability concerns.

Looking ahead, Stewart’s management expects growth to be driven by continued commercial expansion, share gains in key states, and the integration of recent acquisitions such as BatchLeads and BatchDialer into its PropStream platform. Eppinger stated, “We remain focused on growth even in a challenged market, and we feel poised to capitalize on improvements when the market returns to normal levels.” While the timing and scale of a broader market recovery remain uncertain, management is positioning the company to outperform through both organic initiatives and inorganic opportunities, especially in commercial and real estate solutions.

Key Insights from Management’s Remarks

Management cited commercial and agency outperformance, margin improvement, and product innovation as key contributors to the quarter’s strong results.

• Commercial segment momentum: Stewart’s domestic commercial business saw robust growth, with management reporting a 46% year-over-year increase driven by investments in talent and expansion into new asset classes, such as energy, data centers, and hospitality. Eppinger noted the company’s focus on both large-scale and “main street” (small-scale) commercial, expanding the addressable market and improving the margin profile.

• Agency services expansion: The agency services business delivered a 25% growth rate, attributed to targeted hiring and deeper commercial support for agents, particularly in 15 key states identified for scale. The company’s “concierge service” for agents, especially on multistate deals, has helped boost share gains and led to higher profitability, despite geographic mix shifts that slightly affected retention rates.

• Direct operations resilience: Direct title operations grew 6% despite flat residential market conditions, with notable strength in small commercial transactions. Management credited investments in micro-market share and ongoing acquisition activity, stating a “warm pipeline” of potential targets.

• Real estate solutions innovation: The real estate solutions segment posted 22% revenue growth, largely due to increased demand for credit information and evaluation services. The acquisition of BatchLeads and BatchDialer enhances the PropStream platform, combining property data with AI-driven marketing tools to improve lead generation for customers.

• Margin and expense control: Cost discipline contributed to improved adjusted pretax margins in both title (up to 8.5%) and real estate solutions segments. Efforts to manage employee and operating expenses, along with favorable claims experience, supported profitability gains even as overall market volumes remained subdued.

Drivers of Future Performance

Stewart expects continued commercial expansion, agency growth, and technology integration to drive performance amid ongoing housing market uncertainty.

• Commercial growth focus: Management plans to sustain commercial momentum by investing in talent and expanding both large and small commercial offerings. While acknowledging that quarter-over-quarter growth rates may moderate due to tougher year-ago comparisons, Eppinger remains confident that Stewart can “grow more than the market” as commercial becomes a larger share of total revenue.

• Agency and geographic strategy: The company is concentrating resources on 15 key states for agency services expansion, aiming to capture scale and share gains. Enhanced agent support and deeper penetration in states like Texas and Ohio are expected to offset geographic mix challenges impacting retention rates, with management emphasizing margin improvement as agency volumes rise.

• PropStream and AI-driven services: The integration of BatchLeads and BatchDialer into PropStream is intended to create a more comprehensive data and marketing platform, supporting Stewart’s real estate solutions segment. Management anticipates that cross-selling and technology upgrades will help capture more lender clients and generate additional revenue streams as the market recovers.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will closely monitor (1) Stewart’s ability to sustain commercial growth as year-over-year comparisons become more challenging, (2) continued execution on agency expansion in targeted key states, and (3) the impact of integrating BatchLeads and BatchDialer on the PropStream platform’s adoption and revenue contribution. We will also watch for margin trends as the company balances investment with cost control.

Stewart Information Services currently trades at $66.09, up from $59.55 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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