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

Root (NASDAQ:ROOT) posted its quarterly earnings results on Wednesday. The company reported $0.86 earnings per share for the quarter, topping analysts’ consensus estimates of $0.63 by $0.23, FiscalAI reports. Root had a net margin of 5.03% and a return on equity of 25.10%. The firm 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 Trading Down 6.1%

Root stock traded down $2.81 during mid-day trading on Friday, hitting $43.47. 192,319 shares of the company’s stock were exchanged, compared to its average volume of 275,064. The firm has a market capitalization of $673.54 million, a P/E ratio of 9.15 and a beta of 3.06. Root has a fifty-two week low of $40.91 and a fifty-two week 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 company’s 50 day simple moving average is $51.12 and its 200-day simple moving average is $54.03.

Analysts Set New Price Targets

ROOT has been the topic of a number of analyst reports. Wells Fargo & Company upped their price target on Root from $47.00 to $53.00 and gave the company an “equal weight” rating in a research report on Thursday. Weiss Ratings restated a “hold (c)” rating on shares of Root in a research report on Monday, October 26th. Jefferies Financial Group cut Root from a “buy” rating to a “hold” rating and lowered their price target for the company from $78.00 to $58.00 in a research note on Tuesday, August 11th. TD Cowen downgraded shares of Root from a “hold” rating to a “strong sell” rating in a research report on Thursday, August 20th. Finally, Keefe, Bruyette & Woods reduced their price objective on shares of Root from $75.00 to $70.00 and set an “outperform” rating on the stock in a research note on Thursday. One analyst has rated the stock with a Buy rating, five have given a Hold rating and one has assigned a Sell rating to the company. According to MarketBeat, the stock currently has a consensus rating of “Hold” and an average target price of $57.75.

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.