Waterdrop (WDH) AI Stock Analysis

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Waterdrop

(NYSE:WDH)

Rating:72Outperform

Price Target:

$1.50

▲(4.90%Upside)

Waterdrop's overall stock score reflects strong earnings growth and a solid financial position. The company's robust performance in the insurance sector and strategic investments in AI technology are significant positives. However, challenges in cash flow and potential profit impacts from increased investments are risks that temper the overall score.

Waterdrop (WDH) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$513.56M

Dividend Yield1.12%

Average Volume (3M)202.73K

Price to Earnings (P/E)9.8

Beta (1Y)0.73

Revenue Growth2.64%

EPS Growth100.00%

CountryUS

Employees3,057

SectorFinancial

Sector Strength80

IndustryInsurance - Diversified

Share Statistics

EPS (TTM)<0.01

Shares Outstanding281,472,020

10 Day Avg. Volume161,537

30 Day Avg. Volume202,732

Financial Highlights & Ratios

PEG Ratio0.08

Price to Book (P/B)0.07

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Waterdrop Business Overview & Revenue Model

Company DescriptionWaterdrop Inc., through its subsidiaries, provides online insurance brokerage services to match and connect users with related insurance products underwritten by insurance companies in the People's Republic of China. The company offers short-term health and long-term health and life insurance products and services. It also operates a medical crowdfunding platform. The company was founded in 2016 and is headquartered in Beijing, the People's Republic of China.

How the Company Makes MoneyWaterdrop generates revenue primarily through its insurance brokerage services, where it earns commissions on insurance policies sold through its platform. The company collaborates with numerous insurance providers to offer a wide range of products, including health, life, and accident insurance. Additionally, Waterdrop has developed a medical crowdfunding platform that allows individuals to raise funds for medical expenses, although this service typically focuses on user engagement rather than direct monetization. Key partnerships with insurance companies and healthcare institutions enhance Waterdrop's ability to provide comprehensive services, contributing to the company's overall earnings.

Waterdrop Earnings Call Summary

Earnings Call Date:Jun 05, 2025

(Q1-2025)

% Change Since: -4.67%|

Next Earnings Date:Sep 03, 2025

Earnings Call Sentiment Positive

Waterdrop demonstrated strong revenue and profit growth, particularly in its insurance business and AI innovations. However, challenges remain in the life insurance sector and potential profit impacts due to increased investments.

Q1-2025 Updates

Positive Updates

Revenue Growth

Waterdrop's revenue reached over RMB 750 million, marking a 7% year-over-year increase. The company anticipates annual revenue growth of over 20% year-over-year.

Profitability

Net profit attributable to ordinary shareholders was RMB 110 million, a significant 34.2% year-over-year growth. This marks the 13th consecutive quarter of GAAP profitability.

Insurance Business Growth

First year premiums (FYP) for the insurance business were approximately RMB 2.09 billion, with a year-over-year growth of 19.3% and a quarter-over-quarter growth of 10.2%.

Strong Operating Profit Margin

The insurance business generated an operating profit of approximately RMB 150 million, with an operating profit margin of 23%.

AI and Innovation

Waterdrop has filed 51 patents related to large language model technology. The AI service quality Copilot improved management efficiency by 83%.

Negative Updates

Pressure on Life Insurance Products

Long-term insurance FYP reached RMB 590 million, representing a 1.6% year-over-year decline, primarily due to pressure on life insurance products.

Increased Investment Impact

The company intends to increase its investment in business growth, which may have a negative impact on the annual profit.

Company Guidance

In the first quarter of 2025, Waterdrop demonstrated significant financial growth and strategic advancements. The company reported a revenue of over RMB 750 million, reflecting a 7% year-over-year increase, and a net profit attributable to ordinary shareholders of approximately RMB 110 million, marking a notable 34.2% growth from the previous year. This quarter marked Waterdrop's 13th consecutive quarter of GAAP profitability. The insurance business segment experienced a robust performance with First Year Premiums (FYP) rising by 19.3% year-over-year and 10.2% quarter-over-quarter, contributing to insurance-related revenue of about RMB 660 million, an 8.4% year-over-year increase. The company's operating profit margin for the insurance business stood at 23%, with the short-term insurance generating RMB 1.5 billion in FYP, reflecting a 30.1% year-over-year growth. Waterdrop's investment in AI technology enhanced their operational efficiency, with AI driving significant improvements across customer service and insurance offerings, including an innovative maternity insurance product and collaboration on medical insurance products for patients with chronic diseases. The company also maintained its commitment to social responsibility, with its charity platform partnering with 117 public charitable organizations and launching over 15.5 charitable projects. Despite planning increased investments to drive business growth in the latter half of the year, which may impact annual profit, Waterdrop remains optimistic about achieving over 20% annual revenue growth year-over-year.

Waterdrop Financial Statement Overview

Summary

Waterdrop shows strong profitability and financial stability improvements, with a significant increase in gross and net profit margins and a strong balance sheet. However, the lack of operating and free cash flow in 2024 indicates potential cash management challenges.

Income Statement

Positive

Waterdrop has demonstrated a strong recovery in its income statement metrics. The company achieved a notable increase in its gross profit margin, from 39.7% in 2023 to 52.5% in 2024. The net profit margin also improved significantly, reaching 13.3% in 2024 compared to 6.4% in 2023. Revenue growth was steady at 5.4%. The EBIT margin turned positive, indicating improved operational performance. However, the EBITDA margin showed a modest increase, suggesting room for further enhancement in operational efficiency.

Balance Sheet

Positive

The balance sheet reflects a robust financial position with a low debt-to-equity ratio of 0.05, highlighting low leverage and financial stability. The return on equity improved to 7.7% in 2024, up from 3.6% in 2023, demonstrating better profitability. The equity ratio remained strong at 74.3%, indicating a solid equity base relative to total assets. The company's conservative debt management and strong equity position contribute to its financial resilience.

Cash Flow

Neutral

Waterdrop's cash flow performance is mixed. The operating cash flow to net income ratio is unavailable for 2024 due to zero operating cash flow. The free cash flow to net income ratio could not be assessed for the same reason. The absence of free cash flow in 2024 indicates potential challenges in generating cash from operations, despite improvements in net income. This highlights a need for better cash flow management.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.77B	2.63B	2.80B	3.21B	3.03B
Gross Profit	1.46B	1.04B	1.78B	2.15B	2.29B
EBITDA	191.71M	6.81M	500.96M	-1.84B	-483.18M
Net Income	367.51M	167.22M	607.72M	-1.57B	-663.85M
Balance Sheet
Total Assets	6.45B	6.15B	5.92B	5.25B	4.71B
Cash, Cash Equivalents and Short-Term Investments	2.60B	3.39B	3.70B	2.79B	2.26B
Total Debt	243.92M	197.76M	14.05M	58.59M	64.26M
Total Liabilities	1.58B	1.47B	1.16B	1.28B	1.52B
Stockholders Equity	4.80B	4.59B	4.77B	3.97B	3.18B
Cash Flow
Free Cash Flow	218.84M	392.99M	753.82M	-1.13B	-803.82M
Operating Cash Flow	437.25M	406.52M	765.71M	-1.10B	-777.11M
Investing Cash Flow	291.64M	-1.17B	-139.82M	-846.90M	-1.22B
Financing Cash Flow	-198.58M	-377.24M	-57.46M	2.12B	2.05B

Waterdrop Technical Analysis

Technical Analysis Sentiment

Positive

Last Price1.43

Price Trends

50DMA

1.38

Positive

100DMA

1.35

Positive

200DMA

1.25

Positive

Market Momentum

MACD

<0.01

Negative

RSI

54.86

Neutral

STOCH

75.26

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WDH, the sentiment is Positive. The current price of 1.43 is above the 20-day moving average (MA) of 1.37, above the 50-day MA of 1.38, and above the 200-day MA of 1.25, indicating a bullish trend. The MACD of <0.01 indicates Negative momentum. The RSI at 54.86 is Neutral, neither overbought nor oversold. The STOCH value of 75.26 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WDH.

Waterdrop Risk Analysis

Waterdrop disclosed 104 risk factors in its most recent earnings report. Waterdrop 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 3 New Risks

We have made investments in generative AI and may face uncertainties with respect to its commercialization and the evolving laws and regulations applicable to us. Q4, 2023

We may be materially adversely affected by the changes and evolvement in the regulation of medical crowdfunding business. Q4, 2023

The legal system in mainland China is evolving, which leads to uncertainties that could adversely affect us. Q4, 2023

Waterdrop Peers Comparison

Overall Rating

UnderperformOutperform

Sector (69)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IGIC	79 Outperform	$1.08B	8.80	20.50%	7.62%	13.29%	17.14%
ESGR	77 Outperform	$5.04B	10.80	8.56%	―	10.70%	-39.16%
WDH	72 Outperform	$513.56M	9.78	8.26%	1.12%	2.64%	100.00%
Sector *	69 Neutral	€14.95B	11.74	14.88%	5.95%	7.26%	0.13%
FIHL	66 Neutral	$1.75B	17.57	-0.42%	2.49%	23.28%	-103.35%
GSHD	58 Neutral	$3.78B	82.81	60.58%	―	21.60%	90.80%
FGF	48 Neutral	$21.51M	11.46	-41.35%	―	27.74%	-33.99%

* Financial Sector Average

Performance Comparison

WDH

Waterdrop

1.42

0.31

27.93%

ESGR

Enstar Group

337.91

18.29

5.72%

FGF

Fundamental Global

16.30

-7.45

-31.37%

IGIC

International General Insurance Holdings

24.23

10.58

77.51%

GSHD

GooseHead Insurance

99.45

45.45

84.17%

FIHL

Fidelis Insurance Holdings Ltd.

15.97

-0.36

-2.20%

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.Date of analysis: Jul 05, 2025