Root (ROOT) AI Stock Analysis

• Market Cap: $1.16B
• Dividend Yield: N/A
• Average Volume (3M): 312.31K
• Price to Earnings (P/E): 23.5
• Beta (1Y): 1.39
• Revenue Growth: 38.50%
• EPS Growth: N/A
• Country: US
• Employees: 1,021
• Sector: Financial
• Sector Strength: 70
• Industry: Insurance - Property & Casualty
• EPS (TTM): -0.35
• Shares Outstanding: 13,702,725
• 10 Day Avg. Volume: 265,977
• 30 Day Avg. Volume: 312,306
• PEG Ratio: -0.29
• Price to Book (P/B): 5.31
• Price to Sales (P/S): 0.92
• P/FCF Ratio: 5.88
• Enterprise Value/Market Cap: 0.00
• Enterprise Value/Revenue: 0.00
• Enterprise Value/Gross Profit: 0.00
• Enterprise Value/Ebitda: 0.00
• 1Y Price Target: $122.00
• Price Target Upside: 66.83% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 1.92
• Revenue Forecast (FY): $1.50B

• Rating: 70 Neutral
• Price Target: $88.00 ▲(20.33% Upside)

Root's overall stock score reflects strong financial performance improvements and positive earnings call highlights. However, technical analysis indicates potential bearish momentum, and valuation is moderate. The company's strategic focus on technology and innovation supports its growth potential, but leverage and competitive pressures should be monitored.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, supporting long-term expansion and profitability.

Innovative Pricing Algorithms

Advanced pricing algorithms enhance customer value and competitive positioning, leading to better retention and profitability.

Strong Capital Position

A robust capital position provides financial stability and flexibility to invest in growth opportunities and weather industry challenges.

Negative Factors

Net Loss and Noncash Expense

Net losses, even if driven by noncash expenses, can impact financial health and investor confidence, posing challenges to profitability.

Increased Competition

Intense competition can pressure pricing and margins, requiring strategic responses to maintain market share and profitability.

Anticipated Seasonal Loss Ratio Increase

Seasonal fluctuations in loss ratios can affect profitability, necessitating effective risk management and pricing strategies.

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 applications, as well as through its website. Its direct distribution channels also cover digital, media, and referral channels, as well as distribution partners and agencies. The company was incorporated in 2015 and is headquartered in Columbus, Ohio.

How the Company Makes Money

Root generates revenue primarily through the sale of auto insurance policies. The company's unique revenue model is centered around usage-based insurance, where customers are assessed through a mobile app that tracks driving behavior. This data-driven approach allows Root to offer personalized premiums, leading to potential cost savings for safe drivers. Key revenue streams include direct premiums written from policyholders, which can fluctuate based on customer acquisition, retention rates, and overall underwriting performance. Additionally, Root may engage in partnerships with automotive and technology companies to enhance its service offerings and expand its customer base, which can contribute to its earnings. The company may also explore ancillary revenue opportunities through value-added services or products related to auto insurance.

Root Financial Statement Overview

Summary

Root has demonstrated significant improvements in profitability and cash flow generation. The income statement shows a positive growth trajectory, with a strong revenue growth rate and improved net profit margin. The balance sheet reflects a stable financial position with improved shareholder returns, though leverage should be monitored. Cash flow metrics indicate efficient cash management.

Income Statement

Root has shown significant improvement in its income statement metrics over the years. The TTM data indicates a strong revenue growth rate of 6.02%, and the company has achieved a positive net profit margin of 6.25%, a substantial improvement from previous losses. The EBIT and EBITDA margins have also improved, reflecting better operational efficiency. However, the gross profit margin remains at 100%, which is unusual and may indicate data issues. Overall, the income statement shows a positive trajectory with increasing profitability.

Balance Sheet

The balance sheet shows a moderate debt-to-equity ratio of 0.82 in the TTM period, indicating manageable leverage. The return on equity has improved significantly to 39.73%, showcasing enhanced profitability for shareholders. However, the equity ratio is not explicitly provided, which limits a complete assessment of financial stability. The balance sheet reflects a stable financial position with improved shareholder returns, though potential risks from leverage should be monitored.

Cash Flow

Root's cash flow statement reveals a positive trend with a free cash flow growth rate of 3.55% in the TTM period. The operating cash flow to net income ratio is not provided, but the free cash flow to net income ratio is high at 96.56%, indicating efficient cash generation relative to net income. The cash flow metrics suggest strong cash management and a healthy cash position, supporting operational and strategic initiatives.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.45B	1.18B	455.00M	310.80M	345.40M	346.80M
Gross Profit	393.80M	337.10M	76.10M	-32.20M	-51.90M	-14.20M
EBITDA	92.30M	88.00M	-88.70M	-249.30M	-484.50M	-269.70M
Net Income	57.10M	30.90M	-147.40M	-297.70M	-521.10M	-363.00M
Balance Sheet
Total Assets	1.64B	1.50B	1.35B	1.31B	1.32B	1.76B
Cash, Cash Equivalents and Short-Term Investments	1.01B	906.10M	845.50M	890.90M	835.90M	1.34B
Total Debt	200.40M	200.10M	299.00M	295.40M	0.00	188.20M
Total Liabilities	1.38B	1.29B	1.18B	1.04B	782.90M	729.90M
Stockholders Equity	265.00M	203.70M	165.70M	277.10M	536.40M	1.03B
Cash Flow
Free Cash Flow	195.30M	183.90M	-43.00M	-220.70M	-414.60M	-303.30M
Operating Cash Flow	205.60M	195.70M	-33.60M	-210.60M	-403.40M	-287.20M
Investing Cash Flow	-99.50M	-154.40M	-45.70M	-16.60M	76.90M	-114.10M
Financing Cash Flow	-127.50M	-120.70M	-4.10M	283.30M	-80.30M	1.10B

Root Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 73.13
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 73.13 is below the 20-day moving average (MA) of 79.09, below the 50-day MA of 79.42, and below the 200-day MA of 110.43, indicating a bearish trend. The MACD of -1.43 indicates Positive momentum. The RSI at 39.87 is Neutral, neither overbought nor oversold. The STOCH value of 7.99 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ROOT.

Root Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SAFT	75 Outperform	$1.18B	13.47	9.97%	4.59%	13.35%	16.56%
STC	74 Outperform	$2.14B	19.81	7.08%	2.88%	16.22%	69.80%
HCI	73 Outperform	$2.51B	12.51	31.94%	0.82%	8.71%	17.26%
SLDE	73 Outperform	$2.42B	1.80	52.29%	―	―	―
ROOT	70 Neutral	$1.16B	23.45	17.02%	―	38.50%	―
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
LMND	60 Neutral	$6.17B	-33.22	-31.34%	―	30.53%	21.82%

Root Corporate Events

Root Reports Record Q3 2025 Revenue Growth

In Q3 2025, Root achieved record growth in policies-in-force and revenue, with a 27% year-over-year increase in total revenue and a 29% growth in net earned premiums. The company reported a gross loss ratio of 59%, benefiting from its advanced pricing and underwriting technology. Root’s strategic focus on technology and innovation has enabled it to expand its independent agent network, tripling new writings year-over-year, and to launch in Washington, increasing its reach to 36 states. Despite a net loss of $5 million due to non-cash expenses related to its partnership with Carvana, Root maintains a strong capital position with $309 million in unencumbered capital. The company continues to invest in technology and growth initiatives to drive long-term profitability and shareholder value.