Kingstone Companies KINS shares are trading at a premium to the Zacks Property and Casualty Insurance industry. Its price-to-book value of 3.36X is higher than the industry average of 1.63X.
It also has a Value Score of B. Back-tested results have shown that stocks with a solid Value Score and a favorable Zacks Rank are the most attractive and their returns are better.
KINS was the 15th largest homeowner insurer in New York in 2023 with a market share of 1.6%. Kingstone Companies is poised to gain from the $200 million market opportunity with its competing carriers exiting the personal property market countrywide in July 2024.
Image Source: Zacks Investment Research
Shares of other insurers like Heritage Insurance Holdings, Inc. HRTG and ROOT Inc. ROOT are also trading at a multiple higher than the industry average.
KINS shares have gained 5.4% year to date, outperforming its industry, sector and the Zacks S&P 500 composite’s return in the same time frame.
KINS vs Industry, Sector & S&P 500 in 3 Months
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KINS Trading Above 50-Day Moving Average
Kingstone shares are trading well above the 50-day moving average, indicating a bullish trend. Shares are trading near the high end of its 52-week range.
KINS Price Movement vs. 50-Day Moving Average
Image Source: Zacks Investment Research
Optimistic Analyst Sentiment for KINS
The Zacks Consensus Estimate of $1.55 for 2025 suggests a 10.7% year-over-year increase on 22.8% higher revenues of $192.6 million. The company has a Growth Score of A.
KINS expects 2025 earnings per share between $1.60 and $2.00.
KINS’ Growth Strategy
Kingstone Companies is well poised for growth, given its heightened focus on its core business and scaling back of unprofitable non-core businesses. The insurer only writes businesses that meet its underwriting standards and profit-margin objectives.
This Northeast regional property and casualty insurer has been successful in implementing a price increase ahead of inflation, matching prices to risks. KINS’ partnership with Earnix enhances its pricing capabilities and supports its strategic growth initiatives.
KINS expects direct written premium in core business to grow between 15% and 25% in 2025.
KINS has been successfully lowering its net underwriting expense ratio by driving higher average premiums and lowering commissions and staffing.
Kingstone Companies has a solid reinsurance program in place that shields its balance sheet from erosion. It has strengthened its balance sheet by improving its cash balance while lowering debt.
KINS’ Favorable Return on Capital
Return on equity in the trailing 12 months was 32.6%, higher than the industry average of 7.6%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
KINS now expects ROE between 32% and 36% in 2024 and 24% and 32% in 2025.
Image Source: Zacks Investment Research
Its return on invested capital (ROIC) has been improving for quite some time. This reflects KINS’ efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 27%, higher than the industry average of 5.8%.
Image Source: Zacks Investment Research
Final Take on KINS Stock
KINS’ focus on growing its core business, improving pricing and combined ratio, expanding margins and delivering strong earnings bodes well for growth. Its VGM Score of A instills confidence in the stock.
The average target price of $17 reflects a 4.6% upside potential to Friday's closing price.
Given its expensive valuation, new investors can wait for a better entry point for this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Heritage Insurance Holdings, Inc. (HRTG) : Free Stock Analysis Report
Kingstone Companies, Inc (KINS) : Free Stock Analysis Report
Root, Inc. (ROOT) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
