Root (NASDAQ:ROOT) Posts Earnings Results

Root (NASDAQ:ROOT) released its quarterly earnings results on Wednesday. The company reported $0.86 EPS for the quarter, beating analysts’ consensus estimates of $0.63 by $0.23, FiscalAI reports. Root had a return on equity of 19.72% and a net margin of 3.78%. The firm had revenue of $381.30 million for the quarter, compared to analyst estimates of $384.43 million.

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

• Root reported $14 million in net income and $34 million in adjusted EBITDA; its combined ratio improved 4.9 points year over year to 97.2%, with the accident-period loss ratio within its 60%–65% target range.
• Revenue fell to $381 million, gross written premium declined 8% year over year, and policies in force were up just 4%. Management expects year-end policies in force to be broadly in line with Q3 as intense competition limits direct-channel growth.
• Root launched its latest pricing algorithm in Q4, which management says has its largest predictive-power improvement to date and could support higher conversion and growth, particularly among preferred customers. The company also plans to expand into more states, targeting near-national coverage by the end of 2027, subject to regulatory approval.
• Partnership-channel new writings grew 19% year over year and made up 52% of total new writings. Root renewed its Carvana program after more than 250,000 policies sold and launched a Hyundai pilot, as it continues to develop embedded and agent distribution.

Root Stock Performance

Root stock traded down $11.83 during trading on Thursday, hitting $45.32. The stock had a trading volume of 273,325 shares, compared to its average volume of 273,621. Root has a 1 year low of $40.91 and a 1 year high of $91.00. The company has a quick ratio of 1.02, a current ratio of 1.02 and a debt-to-equity ratio of 0.60. The stock’s 50 day moving average is $51.36 and its two-hundred day moving average is $54.15. The stock has a market cap of $702.04 million, a price-to-earnings ratio of 12.78 and a beta of 3.06.

Wall Street Analyst Weigh In

A number of research analysts have weighed in on ROOT shares. Keefe, Bruyette & Woods reduced their price objective on shares of Root from $95.00 to $80.00 and set an “outperform” rating for the company in a report on Thursday, August 6th. TD Cowen downgraded shares of Root from a “hold” rating to a “strong sell” rating in a research report on Thursday, August 20th. Weiss Ratings restated a “hold (c)” rating on shares of Root in a report on Monday, October 26th. Wells Fargo & Company raised their price target on shares of Root from $47.00 to $53.00 and gave the company an “equal weight” rating in a research report on Thursday. Finally, Jefferies Financial Group downgraded Root from a “buy” rating to a “hold” rating and cut their price target for the company from $78.00 to $58.00 in a research note on Tuesday, August 11th. One equities research analyst has rated the stock with a Buy rating, five have assigned a Hold rating and one has given a Sell rating to the company’s stock. According to MarketBeat.com, the company currently has a consensus rating of “Hold” and a consensus price target of $60.25.

About Root

Root, Inc (NASDAQ:ROOT) is an insurance technology company that uses mobile technology and data-driven underwriting to provide personal insurance products. The company is best known for its automobile insurance, which is offered through a digital platform designed to allow customers to obtain quotes, purchase coverage and manage policies through a smartphone.

Root’s auto insurance model uses information collected through its mobile application, including driving-related data, to evaluate individual driving behavior and help determine eligibility and pricing.