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TWFG, Inc. Class A (TWFG)
:TWFG
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TWFG, Inc. Class A
(NASDAQ:TWFG)
77Outperform
Positive Factors
Mergers and Acquisitions
TWFG announced two corporate location acquisitions and that its M&A financials are in line with prior expectations.
Revenue Growth
TWFG remains on track to grow revenues and earnings at roughly 20% for 2025 and beyond.
Tax Structure
TWFG's Up-C tax structure should allow it to better attract M&A, materially benefiting EBITDA growth for the foreseeable future.
Negative Factors
Guidance
Woodlands' 2025 guidance came in well below on adj EBITDA margins and more modestly below on organic growth and total revenue growth.
Product Availability
Investors will be looking for clues on how growth in California, TWFG's second largest state, could play out given a likely lack of product availability post-recent fires.
TWFG, Inc. Class A (TWFG) vs. S&P 500 (SPY)
Market Cap
$1.26B
Dividend YieldN/A
Average Volume (3M)97.72K
Price to Earnings (P/E)28.4
Beta (1Y)0.44
Revenue Growth19.19%
EPS Growth-37.56%
CountryUS
Employees293
SectorFinancial
Sector Strength86
IndustryInsurance - Brokers
Share Statistics
EPS (TTM)1.10
Shares Outstanding14,904,083
10 Day Avg. Volume123,276
30 Day Avg. Volume97,716
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)16.70
Price to Cash Flow (P/CF)35.90
P/FCF Ratio35.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$33.60Price Target Upside7.52% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
TWFG, Inc. Class A Business Overview & Revenue Model
Company DescriptionTWFG, Inc. Class A (TWFG) is a company operating in the insurance sector, offering a wide range of insurance products, including personal, commercial, and life insurance policies. The company focuses on providing tailored insurance solutions to meet the diverse needs of its clients, leveraging a network of agents and brokers to deliver its services across various regions.
How the Company Makes MoneyTWFG, Inc. generates revenue primarily through the sale of insurance policies. The company earns premiums from policyholders, which form the core of its revenue stream. Additionally, TWFG may also gain income from investment activities, as insurance companies often invest the premiums they collect to generate returns. The company might have partnerships with various underwriters and reinsurers to manage risk and enhance its service offerings, though specific details on these partnerships are unavailable.
TWFG, Inc. Class A Financial Statement Overview
Summary
TWFG exhibits strong financial health with improvements in revenue growth, profitability, and cash flow metrics. Key strengths include significant revenue and margin growth, improved equity ratios, and strong cash generation. However, the impressive growth rates may partially reflect past underperformance and reduced leverage might limit benefits in growth scenarios.Income Statement
TWFG demonstrated strong revenue growth of 22% year-over-year, moving from $166.99M to $203.76M. The gross profit margin improved significantly, indicating enhanced efficiency in managing costs, moving from 18.87% to 85.74%. Net profit margin also increased markedly from 2.47% to 14.03%, reflecting improved profitability. Both EBIT and EBITDA margins showed healthy improvements, underscoring operational efficiency. However, the prior year had a lower base, which might have contributed to the impressive growth percentage.85
Very Positive
Balance Sheet
TWFG's balance sheet shows a solid equity ratio of 22.84%, suggesting a stable financial position with a manageable level of liabilities. The debt-to-equity ratio decreased significantly from 1.67 to 0.09, indicating reduced leverage. Return on equity improved from 13.31% to 38.71%, demonstrating an enhanced ability to generate returns from shareholder investments. However, the reduced debt levels might limit leverage benefits in certain growth scenarios.78
Positive
Cash Flow
TWFG's free cash flow increased from $14.51M to $37.28M, indicating robust cash generation capabilities. The operating cash flow to net income ratio was strong at 1.42, reflecting efficient cash conversion. The free cash flow to net income ratio was 1.30, highlighting effective free cash flow generation relative to net income. The significant improvement in free cash flow growth and cash flow ratios suggests a strong operational cash generation capacity, though capital expenditures did see a decline.82
Very Positive
| Breakdown | |||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 |
|---|---|---|---|
| Income Statement | Total Revenue | ||
| 185.45M | 203.76M | 166.99M | 147.78M | Gross Profit |
| 39.51M | 174.70M | 31.51M | 30.23M | EBIT |
| 24.00M | 27.93M | 21.61M | 23.76M | EBITDA |
| 33.51M | 44.33M | 26.46M | 27.05M | Net Income Common Stockholders |
| 3.69M | 28.59M | 4.13M | 20.61M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||
| 39.30M | 195.77M | 39.30M | 22.33M | Total Assets |
| 115.44M | 323.43M | 115.44M | 114.15M | Total Debt |
| 51.76M | 6.30M | 51.76M | 13.31M | Net Debt |
| 12.46M | -189.47M | 12.46M | -9.02M | Total Liabilities |
| 84.39M | 48.14M | 84.39M | 56.37M | Stockholders Equity |
| 31.05M | 73.88M | 31.05M | 57.79M |
| Cash Flow | Free Cash Flow | ||
| 4.53M | 37.28M | 14.51M | 13.48M | Operating Cash Flow |
| 34.93M | 40.48M | 30.15M | 25.75M | Investing Cash Flow |
| -30.30M | -25.05M | -14.65M | -14.50M | Financing Cash Flow |
| 154.84M | 143.43M | -9.70M | -15.26M |
TWFG, Inc. Class A Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $85.42B | 51.38 | 9.46% | 0.73% | 15.21% | 46.99% | |
77 Outperform | $1.26B | 28.41 | 31.05% | ― | 19.19% | -37.56% | |
76 Outperform | $19.52B | 36.79 | 32.89% | 1.24% | 16.38% | 34.58% | |
76 Outperform | $34.07B | 34.41 | 16.35% | 0.47% | 12.89% | 13.50% | |
76 Outperform | $112.76B | 27.95 | 31.80% | 1.38% | 7.60% | 8.66% | |
73 Outperform | $79.71B | 29.55 | 100.25% | 0.72% | 17.51% | 1.31% | |
64 Neutral | $13.37B | 9.30 | 9.39% | 4.85% | 16.11% | -8.85% |
* Financial Sector Average
Performance Comparison
TWFG
TWFG, Inc. Class A
31.25
8.64
38.21%
AON
Aon
376.30
73.59
24.31%
AJG
Arthur J Gallagher & Co
334.02
103.85
45.12%
BRO
Brown & Brown
118.86
38.29
47.52%
ERIE
Erie Indemnity Company
419.23
45.12
12.06%
MMC
Marsh & Mclennan Companies
233.34
38.86
19.98%
TWFG, Inc. Class A Earnings Call Summary
Earnings Call Date: Mar 19, 2025 | % Change Since: -2.34% | Next Earnings Date: Sep 2, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mixed outlook with significant achievements in IPO completion, revenue growth, and geographical expansion, balanced by challenges from natural disasters and increased operational expenses. Despite a decrease in net income, the company showed resilience and strategic foresight.Highlights
Successful IPO Launch
TWFG completed its IPO in July, raising $192.9 million in net proceeds through the issuance of 12,650,000 shares of Class A common stock at $17 per share.
Geographical Expansion and Recruitment
TWFG launched 86 new locations in Q3, expanding into 13 new states, which includes Alabama, Connecticut, Idaho, Indiana, Missouri, Nevada, New Mexico, Oregon, South Carolina, South Dakota, Tennessee, Washington, and Wyoming.
Revenue and Income Growth
TWFG reported a 14.5% total revenue growth, 7.6% organic revenue growth, a 15.3% adjusted net income margin, and a 21.5% adjusted EBITDA margin for the quarter.
Increased Written Premiums
Written premiums increased by $46 million or 13% to $400.1 million, driven by new business acceleration and normalized retention levels.
Lowlights
Impact of Natural Disasters
TWFG faced operational disruptions due to Hurricanes Beryl, Francine, Helene, and Milton impacting various locations, though they managed to maintain business continuity.
Decrease in Net Income
Net income for the quarter decreased by $0.7 million or 9.4% over the prior year period to $6.9 million.
Increased Expenses
Total salary and benefits expense increased by $4.9 million or 146% over the prior year period to $8.3 million, largely due to branch conversions and public company costs.
Company Guidance
During the TWFG Q3 2024 earnings call, the company provided detailed financial guidance showcasing robust growth and strategic resilience. TWFG reported a 14.5% increase in total revenue, reaching $54.6 million, and a 7.6% organic revenue growth. The company's adjusted net income margin was 15.3%, while the adjusted EBITDA margin stood at 21.5%. Written premium increased by $46 million, totaling $400.1 million, driven by an increase in new business premiums by 39% and a normalization in premium retention to 88%. The firm also highlighted successful recruiting efforts with 86 new agency locations opened, expanding into 13 new states. Despite the challenges posed by multiple hurricanes, TWFG successfully completed its IPO, raising $192.9 million, further strengthening its conservative balance sheet and positioning the company for continued growth and acquisition opportunities.TWFG, Inc. Class A Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
TWFG, Inc. Approves New Incentive Plan Awards
Neutral
Apr 8, 2025
On March 31, 2025, TWFG, Inc. announced the approval of new forms of restricted stock unit (RSU) and performance stock unit (PSU) award agreements under its 2024 Omnibus Incentive Plan. These awards are designed to incentivize key executives, including the CEO, CFO, and COO, by tying their compensation to the company’s financial performance and long-term service. The RSUs vest over three years, while the PSUs are contingent on achieving specific EBITDA and revenue goals over a two-year period, with provisions for early vesting in the event of a change in control or qualifying termination.
Spark’s Take on TWFG Stock
According to Spark, TipRanks’ AI Analyst, TWFG is a Outperform.
TWFG’s strong financial performance and strategic resilience, particularly in revenue and geographical expansion, are key strengths. The technical analysis shows stability with slight upward momentum. Valuation suggests the stock is fairly priced, albeit without a dividend yield. Earnings call insights underscore strategic growth initiatives and resilience despite operational challenges, leading to a solid overall score.
To see Spark’s full report on TWFG stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.