Root (NASDAQ:ROOT) versus Investors Title (NASDAQ:ITIC) Critical Review

Investors Title (NASDAQ:ITIC) and Root (NASDAQ:ROOT) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their profitability, valuation, dividends, earnings, analyst recommendations, institutional ownership and risk.

Analyst Recommendations

This is a breakdown of current recommendations for Investors Title and Root, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Investors Title	0	0	1	0	3.00
Root	1	4	2	0	2.14

Root has a consensus price target of $93.60, suggesting a potential upside of 65.93%. Given Root’s higher probable upside, analysts clearly believe Root is more favorable than Investors Title.

Valuation & Earnings

This table compares Investors Title and Root”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Investors Title	$272.76 million	1.90	$35.18 million	$18.57	12.83
Root	$1.52 billion	0.58	$40.30 million	$3.34	16.89

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

Institutional & Insider Ownership

41.4% of Investors Title shares are held by institutional investors. Comparatively, 59.8% of Root shares are held by institutional investors. 26.0% of Investors Title shares are held by company insiders. Comparatively, 12.0% of Root shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility & Risk

Investors Title has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, Root has a beta of 2.95, indicating that its share price is 195% more volatile than the S&P 500.

Profitability

This table compares Investors Title and Root’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Investors Title	13.59%	14.06%	10.65%
Root	3.58%	19.97%	3.39%

Summary

Root beats Investors Title on 8 of the 14 factors compared between the two stocks.

About Investors Title

Investors Title Company engages in the issuance of residential and commercial title insurance for residential, institutional, commercial, and industrial properties. The company underwrites land title insurance for owners and mortgagees as a primary insurer; and assumes the reinsurance of title insurance risks from other title insurance companies. It offers services in connection with tax-deferred exchanges of like-kind property; acts as a qualified intermediary in tax-deferred exchanges of property; coordinates the exchange aspects of the real estate transaction, such as drafting standard exchange documents, holding the exchange funds between the sale of the old property and the purchase of the new property, and accepting the formal identification of the replacement property. In addition, it serves as an exchange accommodation titleholder for accomplishing reverse exchanges when the taxpayers decide to acquire replacement property before selling the relinquished property. Further, the company offers investment management and trust services to individuals, companies, banks, and trusts; and consulting and management services to clients to start and operate a title insurance agency. It issues title insurance policies directly and through a network of agents in 22 states and the District of Columbia, primarily in the eastern half of the United States. Investors Title Company was founded in 1972 and is headquartered in Chapel Hill, North Carolina.

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.