Root (ROOT) AI Stock Analysis

• Market Cap: $1.23B
• Dividend Yield: N/A
• Average Volume (3M): 572.84K
• Price to Earnings (P/E): 25.4
• Beta (1Y): 1.25
• 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: 736,644
• 30 Day Avg. Volume: 572,840
• 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: 1.38
• Enterprise Value/Revenue: 1.17
• Enterprise Value/Gross Profit: 5.40
• Enterprise Value/Ebitda: 19.26
• 1Y Price Target: $120.50
• Price Target Upside: 52.38% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 67 Neutral
• Price Target: $88.00 ▲(11.28% Upside)

Root's overall stock score reflects a solid financial performance with strong revenue growth and improved profitability. The technical analysis indicates a bearish trend, which is a significant factor in the score. Valuation is moderate, and the earnings call provided positive insights into growth potential, despite some challenges. The absence of corporate events did not impact the score.

Positive Factors

Revenue Growth

Record revenue growth indicates strong market demand and effective business strategies, supporting long-term financial health.

Competitive Advantage

Root's integration of technology and insurance enhances efficiency and customer experience, strengthening its market position.

Market Expansion

Expanding into Washington increases Root's market reach, potentially boosting customer base and revenue in a tech-savvy region.

Negative Factors

Competitive Pressure

Competitive pressures in direct channels may limit growth and require strategic shifts, impacting long-term profitability.

Profitability Pressure

Ongoing investments and seasonal pressures may strain profitability, requiring careful financial management to sustain growth.

Free Cash Flow Decline

Declining free cash flow could limit Root's ability to invest in growth opportunities and manage debt, affecting financial flexibility.

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 demonstrates a positive financial trajectory with strong revenue growth and improved profitability. The balance sheet reflects a stable leverage position, though the equity ratio suggests caution. Cash flow generation is efficient, but the recent decline in free cash flow growth warrants attention. Overall, Root is on a solid path but should focus on maintaining margins and improving cash flow stability.

Income Statement

Root has shown a strong revenue growth rate of 7.37% in the TTM, indicating a positive trajectory. The gross profit margin is healthy at 20.15%, and the net profit margin has improved to 8.22%, reflecting enhanced profitability. However, the gross profit margin has decreased from the previous year, and there is room for improvement in EBIT and EBITDA margins.

Balance Sheet

The company's debt-to-equity ratio has improved to 0.82, indicating a balanced leverage position. Return on equity is strong at 39.22%, showcasing effective use of equity to generate profits. However, the equity ratio is relatively low, suggesting potential risks if asset values fluctuate.

Cash Flow

Operating cash flow is robust, but free cash flow has seen a slight decline of 3.98% in the TTM. The free cash flow to net income ratio is high at 96.56%, indicating efficient cash generation relative to net income. However, the negative growth in free cash flow is a concern that needs addressing.

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	312.40M	1.18B	455.00M	-32.20M	-51.90M	-14.20M
EBITDA	87.60M	88.00M	-93.50M	-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	653.30M	230.40M	678.70M	890.90M	835.90M	1.34B
Total Debt	200.40M	200.10M	299.00M	295.40M	14.10M	178.00M
Total Liabilities	1.27B	1.29B	1.07B	1.04B	130.70M	729.90M
Stockholders Equity	265.00M	203.70M	277.70M	277.10M	536.40M	1.03B
Cash Flow
Free Cash Flow	201.20M	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: 79.08
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 79.08 is below the 20-day moving average (MA) of 79.65, below the 50-day MA of 87.51, and below the 200-day MA of 115.60, indicating a bearish trend. The MACD of -1.60 indicates Negative momentum. The RSI at 45.56 is Neutral, neither overbought nor oversold. The STOCH value of 56.92 is Neutral, 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	$1.11B	12.66	9.97%	5.31%	13.35%	16.56%
STC	74 Outperform	$1.93B	19.18	7.08%	2.84%	16.22%	69.80%
HCI	73 Outperform	$2.35B	11.58	31.94%	0.80%	8.71%	17.26%
SLDE	73 Outperform	$2.11B	1.63	52.29%	―	―	―
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
ROOT	67 Neutral	$1.23B	25.36	17.02%	―	38.50%	―
LMND	53 Neutral	$5.61B	―	-31.34%	―	30.53%	21.82%

Root Corporate Events

Root, Inc. Achieves Record Growth Amidst Challenges

Root, Inc. Reports Record Growth Amidst Competitive Challenges

Root, Inc. Reports Strong Q3 2025 Growth

Root, Inc., based in Columbus, Ohio, is a technology-driven insurance company that leverages data science to offer personalized insurance solutions, primarily in the auto insurance sector. In its latest earnings report for Q3 2025, Root, Inc. announced a significant growth in revenue and policies-in-force, driven by a 29% increase in net earned premiums and a tripling of new writings through independent agents. The company reported a gross loss ratio of 59%, showcasing the effectiveness of its pricing and underwriting technology. Key financial highlights include a 17% increase in gross premiums written and an 18% rise in gross premiums earned year-over-year. Despite a net loss of $5 million due to non-cash expenses related to its partnership with Carvana, Root, Inc. maintained a strong capital position with $309 million in unencumbered capital. Looking ahead, Root, Inc. remains optimistic about its growth prospects, driven by its technology and data science capabilities, and aims to expand its distribution channels and geographic footprint.

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.

The most recent analyst rating on (ROOT) stock is a Hold with a $84.00 price target. To see the full list of analyst forecasts on Root stock, see the ROOT Stock Forecast page.

Root Inc. Q2 Earnings Call Highlights Strategic Growth

Root Inc. Reports Strong Q2 Performance Amid Strategic Progress and Challenges

Root, Inc. Reports Strong Q2 2025 Financial Performance

Root, Inc., a technology-driven insurance company, leverages data science to offer personalized auto insurance solutions. In the second quarter of 2025, Root, Inc. reported a record revenue with gross earned premiums increasing by 21% to $371 million and a significant improvement in net income by $30 million, reaching $22 million. The company also saw a 6-point improvement in its gross combined ratio, indicating enhanced pricing and underwriting capabilities. Key achievements include a 12% growth in policies in force and a tripling of new writings in the Partnership channel, highlighting Root’s strategic focus on customer-centric experiences.