Root (NASDAQ:ROOT) Releases Quarterly Earnings Results, Beats Estimates By $0.66 EPS

Root (NASDAQ:ROOT) posted its earnings results on Wednesday. The company reported $1.49 EPS for the quarter, topping the consensus estimate of $0.83 by $0.66, FiscalAI reports. Root had a return on equity of 19.97% and a net margin of 3.58%.The business had revenue of $389.20 million during the quarter, compared to the consensus estimate of $395.14 million. During the same quarter last year, the company earned $1.29 EPS. Root’s revenue was up 1.6% on a year-over-year basis.

Here are the key takeaways from Root’s conference call:

• Profitability remained strong: second-quarter net income rose 15% year over year to $25 million, revenue increased 2% to $389 million, and the net combined ratio improved to 92.1%.
• Growth moderated as direct-market competition intensified, with gross written premium down 2% year over year and a sequential decline in policies in force. Management said 2026 year-end policies in force could be roughly flat year over year if current conditions persist.
• Root is expanding its growth channels, with partnerships and independent agents accounting for approximately 51% of new writings versus 44% a year ago. New Jersey launched in July, bringing Root to 37 states and more than 80% of the addressable population, with a near-national footprint targeted by the end of 2027.
• Management expects to launch a new predictive pricing model in the fourth quarter, supported by proprietary data from more than 37 billion driving miles and 900,000 claims. The company believes improved segmentation and AI-enabled automation can strengthen pricing, claims, customer service, and long-term growth.
• Root expects to invest approximately $10 million in second-half R&D and cautioned that loss ratios typically rise seasonally in the second half. The 26% second-quarter net expense ratio benefited partly from lower performance-based equity compensation and should not be treated as a normalized run rate.

Root Trading Up 2.0%

NASDAQ:ROOT traded up $1.16 during trading hours on Wednesday, hitting $60.28. 247,857 shares of the stock were exchanged, compared to its average volume of 200,565. The company has a market capitalization of $954.23 million, a P/E ratio of 18.05 and a beta of 2.89. The company has a quick ratio of 1.07, a current ratio of 1.07 and a debt-to-equity ratio of 0.61. The company’s 50 day moving average is $57.11 and its two-hundred day moving average is $55.37. Root has a twelve month low of $40.91 and a twelve month high of $128.26.

Institutional Investors Weigh In On Root

A number of institutional investors and hedge funds have recently made changes to their positions in ROOT. T. Rowe Price Investment Management Inc. increased its position in Root by 8.5% in the fourth quarter. T. Rowe Price Investment Management Inc. now owns 946,632 shares of the company’s stock worth $68,376,000 after purchasing an additional 74,427 shares during the period. Geode Capital Management LLC lifted its position in Root by 4.1% during the 4th quarter. Geode Capital Management LLC now owns 310,967 shares of the company’s stock valued at $22,466,000 after purchasing an additional 12,238 shares during the period. State Street Corp boosted its stake in shares of Root by 5.0% in the 4th quarter. State Street Corp now owns 258,168 shares of the company’s stock valued at $18,647,000 after purchasing an additional 12,321 shares during the last quarter. UBS Group AG grew its position in shares of Root by 372.1% during the 3rd quarter. UBS Group AG now owns 228,738 shares of the company’s stock worth $20,474,000 after buying an additional 180,289 shares during the period. Finally, Millennium Management LLC grew its position in shares of Root by 780.1% during the 4th quarter. Millennium Management LLC now owns 220,815 shares of the company’s stock worth $15,949,000 after buying an additional 195,725 shares during the period. Institutional investors own 59.82% of the company’s stock.

Analysts Set New Price Targets

A number of research analysts have recently issued reports on the stock. Zacks Research upgraded shares of Root from a “strong sell” rating to a “hold” rating in a research note on Monday, June 8th. UBS Group set a $50.00 price objective on Root and gave the stock a “neutral” rating in a research note on Monday, May 11th. Keefe, Bruyette & Woods decreased their target price on Root from $104.00 to $95.00 and set an “outperform” rating on the stock in a report on Tuesday, April 7th. Wells Fargo & Company lifted their price target on Root from $58.00 to $61.00 and gave the company an “equal weight” rating in a report on Thursday, July 9th. Finally, TD Cowen reiterated a “hold” rating on shares of Root in a research report on Wednesday, June 17th. Two equities research analysts have rated the stock with a Buy rating and five have issued a Hold rating to the company. According to MarketBeat.com, the company currently has an average rating of “Hold” and a consensus target price of $86.00.

About Root

Root, trading on the Nasdaq under the ticker ROOT, is a Columbus, Ohio–based insurance company that leverages mobile technology and data analytics to offer personalized auto insurance policies. Founded in 2015 by Alex Timm and Dan Manges, Root set out to transform traditional underwriting by focusing on individual driving behavior rather than broad demographic factors.

The company’s core product is usage-based auto insurance, delivered through a smartphone app that monitors driving patterns such as speed, braking and phone usage behind the wheel.