Root, Inc. Valuation and Profitability Analysis

Root, Inc. has seen significant growth in its valuation over the years, with a valuation of $3.6 billion in 2022. This growth is a testament to the company's innovative approach to car insurance.

The company's valuation has been driven by its unique business model, which uses a combination of data analytics and AI to offer personalized insurance policies to customers. This approach has allowed Root to differentiate itself from traditional insurance companies.

Root's profitability has also been impressive, with the company reporting a net income of $143.5 million in 2022. This is a significant increase from the $10.5 million reported in 2021.

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Root, Inc.'s financial performance is a mixed bag. The company's profit margin is a concerning -1.50%. This indicates that for every dollar Root, Inc. generates, it's losing 1.50 cents.

The Return on Assets (ttm) is 1.48%, which suggests that Root, Inc. is generating some revenue but not efficiently using its assets. Return on Equity (ttm) is a dismal -5.21%, indicating that the company is struggling to generate profits from shareholder equity.

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Revenue (ttm) is a respectable 1.04 billion dollars, but it's not enough to cover the company's losses. Net Income Available to Common (ttm) is a negative 15.7 million dollars, highlighting the company's struggles to turn a profit.

Diluted EPS (ttm) is a negative 1.15, indicating that the company is experiencing significant losses per share.

Root, Inc. has a market capitalization of 1.28B. The company's enterprise value is 910.96M, and its forward P/E ratio is 3.81.

The P/E ratio for 2024 is 54,966x, and the P/E ratio for 2025 is -167x.

Root, Inc.'s valuation metrics also include a price-to-sales ratio of 1.32 and a price-to-book ratio of 7.06.

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Valuation is a critical aspect of understanding a company's financial health and growth potential. Market capitalization, also known as market cap, is a key valuation metric that represents the total value of a company's outstanding shares.

Market cap can fluctuate over time and is influenced by various factors such as stock price and outstanding shares. For instance, Root, Inc.'s market capitalization has ranged from $981M to $13.43B.

The price-to-earnings (P/E) ratio is another important valuation metric that compares a company's stock price to its earnings per share. A lower P/E ratio can indicate that a company's stock is undervalued. For example, Root, Inc.'s P/E ratio for 2024 is 54,966x, which is significantly higher than its P/E ratio for 2025, which is -167x.

Enterprise value (EV) is a comprehensive valuation metric that includes a company's market cap, debt, and cash. EV can be used to evaluate a company's value relative to its revenue. For instance, Root, Inc.'s EV-to-sales ratio for 2024 is 1.67x, which is relatively low compared to its EV-to-sales ratio for 2025, which is 1.69x.

Here are some key valuation metrics for the companies mentioned:

These valuation metrics provide valuable insights into a company's financial health and growth potential. By analyzing these metrics, investors and analysts can make informed decisions about whether to invest in a company or not.

The profitability rank is a crucial aspect of evaluating a company's financial health. A profitability rank of -1.46 indicates that the company is currently unprofitable.

The net margin percentage is a key metric in this regard, and a negative net margin of -1.46% suggests that the company is struggling to maintain profitability. In contrast, the FCF margin percentage is a positive 15.61%, indicating that the company is generating a significant amount of free cash flow.

The return on equity (ROE) percentage is a critical metric for evaluating a company's profitability, and a negative ROE of -9.03% suggests that the company is not generating sufficient profits to cover its equity costs. Similarly, the return on assets (ROA) percentage is also negative at -1.07%, indicating that the company is not generating sufficient profits to cover its asset costs.

However, the return on invested capital (ROIC) percentage is a more comprehensive metric that takes into account both debt and equity costs. A positive ROIC of 4.77% suggests that the company is generating sufficient profits to cover its invested capital costs. Additionally, the 3-year ROIC percentage of 437.99% is a significant improvement over the current ROIC, indicating a positive trend in the company's profitability.

The Root Return has significantly outperformed the S&P over the past year, with a 822.37% gain compared to the S&P's 22.93%.

Looking at the 5-year performance, the S&P has actually done better, with a 83.67% gain compared to the Root Return's negative 83% gain.

The S&P's 5-year annualized return is a respectable 12.93%, a stark contrast to the Root Return's lackluster performance.

Here's a comparison of the two returns over the past year and 5 years:

The Root Return's poor performance over the long term is a red flag for investors, serving as a cautionary tale of the importance of doing your research before investing.

Analysts' recommendations for Root, Inc. are a mixed bag. JMP Securities downgraded Root to Market Perform from Market Outperform on November 22.

UBS has been a bit more optimistic, raising its price target on Root to $67 from $61 and maintaining a Neutral rating. This suggests that UBS still sees some potential for growth, but not enough to warrant a higher rating.

However, just a few days later, UBS adjusted its price target down to $61 from $71, while maintaining the same Neutral rating. This indicates that UBS may have tempered its expectations for Root's performance.

Keefe, Bruyette & Woods has been a fan of Root, maintaining an Outperform rating and raising its price target to $80 from $70 on May 7. This suggests that KBW sees significant potential for Root's growth and is willing to take on a bit more risk.

In a more dramatic move, KBW raised its price target to $70 from just $22 on April 24, also maintaining an Outperform rating. This indicates that KBW was initially very bearish on Root, but has since become much more optimistic.

Here's a summary of the analysts' recommendations:

Root, Inc. is facing a tough day in the stock market. The company recently got downgraded by an analyst.

This news has likely contributed to the decline in Root's stock value.

Root, Inc. has released its earnings call transcripts for various quarters.

The most recent one is for the period ending March 31, 2022, which is available for public review.

Root, Inc. has consistently made its earnings call transcripts publicly available.

The Q4 2021 earnings call transcript, for the period ending December 31, 2021, provides insight into the company's financial performance during that quarter.

The company's financial performance has been a topic of interest for investors and analysts.

Root, Inc.'s Q3 2021 earnings call transcript, for the period ending September 30, 2021, offers a snapshot of the company's financial situation at that time.

These transcripts offer a wealth of information for those interested in Root, Inc.'s financial performance.

They can be found online and are a useful resource for anyone looking to stay informed about the company's progress.

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Root, Inc. has been active in the press release scene, announcing various company updates and achievements.

Root, Inc. scheduled a conference call to discuss its 2024 fourth quarter and full year financial results on January 22.

The company also hosted a conference at the National Automobile Dealers Association Show in New Orleans on January 13.

Root, Inc. participated in the 27th Annual ICR Conference on January 8.

Root Insurance expanded to Minnesota, offering personalized, driver-based rates as of December 17.

Root, Inc. announced its 2024 third quarter results on October 30.

Root, Inc. recently presented at the 27th Annual ICR Conference, which took place on January 13, 2025.

The event was a significant milestone for Root, Inc. as it continues to expand its services.

Root has expanded its car insurance services to Minnesota, a move that was announced on December 17. This expansion marks a significant step in the company's growth and development.

Root's expansion to Minnesota offers personalized, driver-based rates, which is a unique selling point for the company.

Here are some key dates related to Root's expansion to Minnesota:

In other news, Root's shares declined after a downgrade from JMP Securities, which downgraded the company to Market Perform from Market Outperform on November 22.