Root (ROOT)
NASDAQ:ROOT
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Root
(NASDAQ:ROOT)
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Rating:58Neutral
Price Target:
$46.00
▲(4.78% Upside)
Action:ReiteratedDate:02/28/26
The score is anchored by improving fundamentals (profitability turnaround and strong recent operating/free cash flow), but is held back by weak technical momentum (below all key moving averages with negative MACD) and questions about earnings stability (gross profit deterioration and guidance for lower 2026 net income as investment ramps).
Positive Factors
Strong cash generation
Consistent, sizable operating and free cash flow in 2024–2025 provides durable internal funding for acquisition spend, reinsurance and tech investment without immediate reliance on capital markets. This strengthens resilience versus underwriting volatility and supports multi‑year growth plans.
Negative Factors
Underwriting/gross profit volatility
A dramatic swing in gross profit highlights unstable underwriting economics and loss‑cost sensitivity. Persistent volatility in core underwriting margins raises the risk that earnings and cash generation could reverse in a loss‑cost or pricing cycle, limiting earnings durability.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation
Consistent, sizable operating and free cash flow in 2024–2025 provides durable internal funding for acquisition spend, reinsurance and tech investment without immediate reliance on capital markets. This strengthens resilience versus underwriting volatility and supports multi‑year growth plans.
Read all positive factors
Root (ROOT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$682.58M
Dividend YieldN/A
Average Volume (3M)371.27K
Price to Earnings (P/E)27.8
Beta (1Y)1.28
Revenue Growth38.50%
EPS GrowthN/A
CountryUS
Employees1,021
SectorFinancial
Sector Strength70
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)0.31
Shares Outstanding13,748,408
10 Day Avg. Volume300,715
30 Day Avg. Volume371,270
Financial Highlights & Ratios
PEG Ratio1.03
Price to Book (P/B)2.83
Price to Sales (P/S)0.74
P/FCF Ratio5.82
Enterprise Value/Market Cap0.16
Enterprise Value/Revenue0.07
Enterprise Value/Gross Profit0.28
Enterprise Value/Ebitda1.45
Forecast
1Y Price Target
$75.33Price Target Upside71.59% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)1.9
Revenue Forecast (FY)$1.64B
Root Business Overview & Revenue Model
Company Description
Root, Inc. provides insurance products and services in the United States. The company offers automobile, homeowners, and renters insurance products. The company operates a direct-to-consumer model and serves customers primarily through mobile appl...
How the Company Makes Money
Root makes money primarily through its property and casualty insurance operations, with revenue historically reported mainly as direct earned premiums from auto insurance policies it underwrites (i.e., premiums recognized as coverage is provided o...
Root Earnings Call Summary
Earnings Call Date:Feb 25, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Positive
The call emphasized strong growth and durable unit economics: notable revenue (+29%) and net income (+30%) expansion in 2025, record full‑year adjusted EBITDA and healthy capital ($312M unencumbered). Rapid channel diversification (partnerships comprising ~50% of Q4 new writings), OEM telematics integrations, and >20% LTV improvement signal significant strategic progress. Near‑term profitability was tempered by intentional investments in partnerships, R&D and marketing (Q4 net income and operating income declined), and management expects lower full‑year net income in 2026 as investments accelerate and loss ratio normalizes. Overall, the positives (robust growth, capital position, technology and partnership momentum) outweigh the near‑term headwinds tied to measured reinvestment.Positive Updates
Strong Revenue and Net Income Growth
Reported 2025 revenue growth of 29% and net income growth of 30%; full-year 2025 net income of $40 million, an increase of $9 million year‑over‑year.
Negative Updates
Q4 Profitability Pressure From Investments
Q4 2025 net income was $5 million, down $17 million YoY; Q4 operating income $11 million (down $24 million YoY) and Q4 adjusted EBITDA $29 million (down $14 million YoY), with declines attributed to deliberate increases in partnership acquisition and direct R&D/marketing investments.
Read all updates
Q4-2025 Updates
Positive
Negative
Strong Revenue and Net Income Growth
Reported 2025 revenue growth of 29% and net income growth of 30%; full-year 2025 net income of $40 million, an increase of $9 million year‑over‑year.
Read all positive updates
Company Guidance
Management guided to accelerating annual policies‑in‑force (PIF) growth in 2026—fuelled by expanded distribution (partnerships, independent agents and geographic expansion)—with sequential PIF gains expected in Q1 (tax‑refund season) though Q1 2026 YoY growth will be less pronounced than Q1 2025 (tariff pull‑forward); they expect accident‑period loss ratios to improve vs Q4 and to remain within the long‑term target range of 60–65% (albeit modestly higher in 2026), assume a low‑single‑digit net trend for loss‑cost inflation, and plan continued investment that will raise acquisition spend (sales & marketing and other insurance expense) while keeping fixed tech/G&A roughly flat as a percent of GEP—consequently, full‑year 2026 net income is expected to be lower than 2025. For context, Root finished 2025 with $1.5B of premiums and $312M of unencumbered capital; 2025 full‑year GWP +16% and GEP +19% (Q4 GWP +9%, GEP +14%), full‑year net income $40M (Q4 net income $5M), operating income $62M (Q4 $11M) and adjusted EBITDA $132M (Q4 $29M); management also noted ~80% U.S. population coverage today with a goal to enter all contiguous states by end‑2027, partnerships comprising nearly half of Q4 new writings and independent‑agent new writings having more than tripled YoY.Root Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
58
Neutral
Cash Flow
73
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.52B | 1.18B | 455.00M | 310.80M | 345.40M |
| Gross Profit | 386.60M | 337.10M | 76.10M | -32.20M | -51.90M |
| EBITDA | 73.60M | 88.00M | -88.70M | -249.30M | -484.50M |
| Net Income | 40.30M | 30.90M | -147.40M | -297.70M | -521.10M |
Balance Sheet | |||||
| Total Assets | 1.54B | 1.32B | 1.17B | 1.09B | 1.06B |
| Cash, Cash Equivalents and Short-Term Investments | 689.90M | 600.30M | 679.70M | 763.10M | 707.00M |
| Total Debt | 201.30M | 202.30M | 299.30M | 298.60M | 14.10M |
| Total Liabilities | 1.14B | 1.00B | 896.50M | 700.80M | 415.10M |
| Stockholders Equity | 396.30M | 315.70M | 277.70M | 389.10M | 648.40M |
Cash Flow | |||||
| Free Cash Flow | 192.40M | 183.90M | -43.00M | -220.70M | -414.60M |
| Operating Cash Flow | 206.50M | 195.70M | -33.60M | -210.60M | -403.40M |
| Investing Cash Flow | -91.70M | -154.40M | -45.70M | -16.60M | 76.90M |
| Financing Cash Flow | -25.20M | -120.70M | -4.10M | 283.30M | -80.30M |
Root Technical Analysis
Negative
43.90
Price Trends
56.02
Negative
67.08
Negative
85.30
Negative
Market Momentum
-3.00
Negative
36.10
Neutral
57.73
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ROOT, the sentiment is Negative. The current price of 43.9 is below the 20-day moving average (MA) of 46.14, below the 50-day MA of 56.02, and below the 200-day MA of 85.30, indicating a bearish trend. The MACD of -3.00 indicates Negative momentum. The RSI at 36.10 is Neutral, neither overbought nor oversold. The STOCH value of 57.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ROOT.
Root Risk Analysis
Root disclosed 64 risk factors in its most recent earnings report. Root reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Root Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $2.18B | 3.54 | 75.10% | ― | ― | ― | |
76 Outperform | $1.06B | 11.55 | 11.29% | 4.59% | 13.35% | 16.56% | |
74 Outperform | $1.96B | 5.59 | 38.04% | 0.82% | 8.71% | 17.26% | |
69 Neutral | $1.80B | 17.66 | 7.77% | 2.88% | 16.22% | 69.80% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
58 Neutral | $682.58M | 27.78 | 10.96% | ― | 38.50% | ― | |
57 Neutral | $4.64B | -30.89 | -31.19% | ― | 30.53% | 21.82% |
* Financial Sector Average
ROOT
Root
43.90
-89.54
-67.10%
SAFT
Safety Insurance Group
72.71
-2.50
-3.33%
STC
Stewart Information Services
59.06
-10.15
-14.67%
HCI
HCI Group
150.49
2.73
1.85%
LMND
Lemonade
60.70
29.27
93.13%
SLDE
Slide Insurance Holdings, Inc.
17.56
-5.74
-24.64%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.