Root Insurance shares bolted higher Thursday after the company closed out its first profitable year with a massive Q4 beat late Wednesday.
Ohio-based Root Insurance is a member of the IBD 50 list. The company provides car insurance, and sees the $300 billion auto insurance market as set for disruption. It is among the first to base its policy rates based on driving behaviors that are tracked through its mobile app.
Root late Wednesday reported earnings of $1.42 per share adjusted, improving from a loss of $1.60 last year. Revenue spiked about 68% to $327 million.
FactSet analysts expected a loss of 45 cents on $291 million in revenue.
Gross premiums written increased 18% to $331 million. Net premiums earned jumped to $300 million from $176 million last year.
Root's policies in force were up 21% to 414,862.
CEO Looks Ahead
During the earnings call, CEO Alex Timm said the company is projecting a low to mid-single digit loss trend in 2025 for rate positions.
Timm did not provide a 2025 guidance, but noted that Root has seen a "favorable growth environment year-to-date."
"There's lots of opportunity to actually scale the company and grow, and we're doing that through our partnerships channel and adding additional partnerships," Timm said, noting Root is expanding to more states. The company also plans to venture into new marketing channels for additional growth.
"Now, that may mean in a certain quarter you will see P&L pressure because we are investing into the business and we know that's the right investment to make over the long-term," he told investors. "But in the short-term, you may see that actually reduce earnings and in a given quarter."
FactSet analysts expect Root Q1 earnings to improve to 18 cents per share from a loss of 42 cents per share last year, on 20% revenue growth to $307 million.
For 2025, analysts expect a loss of 41 cents per share. FactSet forecasts earnings improve to $1.10 per share for 2026.
Root Stock Rises In Early Trade
ROOT stock rallied more than 25% Thursday. That lifted shares to around a 118.15 buy point in a 14-week cup base. Shares had fallen more than 8% below that entry following a mid-February breakout, triggering the automatic sell rule.
Rival Progressive rose 2% Thursday. PGR stock is trading in a buy zone for a cup base, above a 270.62 buy point.
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