Root (NASDAQ:ROOT) Issues Earnings Results, Beats Expectations By $0.23 EPS

Root (NASDAQ:ROOT) issued its quarterly earnings results on Wednesday. The company reported $0.86 earnings per share (EPS) for the quarter, topping 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 business had revenue of $381.30 million for the quarter, compared to the consensus estimate 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 Price Performance

NASDAQ:ROOT traded up $3.28 during mid-day trading on Wednesday, reaching $57.15. The stock had a trading volume of 209,886 shares, compared to its average volume of 273,744. The stock has a 50-day simple moving average of $51.37 and a two-hundred day simple moving average of $54.22. The stock has a market capitalization of $885.25 million, a PE ratio of 16.14 and a beta of 3.06. The company has a debt-to-equity ratio of 0.60, a current ratio of 1.02 and a quick ratio of 1.02. Root has a 12 month low of $40.91 and a 12 month high of $91.00.

Analysts Set New Price Targets

ROOT has been the subject of several analyst reports. Wells Fargo & Company reaffirmed a “cautious” rating on shares of Root in a report on Monday, October 12th. TD Cowen lowered Root from a “hold” rating to a “strong sell” rating in a report on Thursday, August 20th. Jefferies Financial Group lowered Root from a “buy” rating to a “hold” rating and reduced their target price for the stock from $78.00 to $58.00 in a report on Tuesday, August 11th. Weiss Ratings restated a “hold (c)” rating on shares of Root in a research report on Monday, October 26th. Finally, Keefe, Bruyette & Woods dropped their price target on Root from $95.00 to $80.00 and set an “outperform” rating for the company in a research note on Thursday, August 6th. One research analyst has rated the stock with a Buy rating, five have issued a Hold rating and one has given a Sell rating to the stock. According to MarketBeat.com, Root presently has an average rating of “Hold” and a consensus target price of $58.75.

Root Company Profile

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.