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Does Root (USA Stocks:ROOT) have stable basic indicators based on the newest gain?

November 7, 2024  By Gabriel Shpitalnik
Macroaxis Story
Root Inc's recent price surge has caught the attention of investors, but a closer look at its fundamentals is essential to gauge its long-term potential. The company, operating in the Insurance - Property & Casualty sector, has a market capitalization of 1.11B, indicating a significant presence in the market. However, with an EPS estimate for the current year at a loss of 1.38, questions arise about its profitability trajectory. Despite this, Root Inc's substantial cash and equivalents of 886.1M provide a cushion against its total liabilities of 896.5M, suggesting a strong liquidity position that could support its operations and growth initiatives. Investors should weigh these factors carefully when considering the stock's long-term viability.

Main Takeaways

Root Inc presents a moderate level of risk for a three-month investment period. The company has a Sharpe Ratio of 0.11, indicating a 0.11% return per unit of risk over the past three months. We've analyzed 28 different technical indicators to help assess whether the anticipated 1.08% returns are worth the associated risk. Consider Root's Risk Adjusted Performance of 0.0739, a semi-deviation of 4.16, and a Coefficient of Variation of 1217.45 to understand the specific risks that cannot be diversified. These metrics provide insight into the potential volatility and performance efficiency of Root Inc, helping investors make informed decisions.
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Reviewed by Vlad Skutelnik

Every cloud has a silver lining, and for Root Inc, the recent price surge might just be that glimmer of hope investors have been waiting for. As a player in the financial services sector, specifically insurance, Root Inc (NASDAQ: ROOT) has been navigating a challenging landscape. Despite its enterprise value standing at $801.3 million, the company faces significant hurdles, including a substantial loss of $155.2 million in EBIT and retained earnings in the red at $1.7 billion. With selling and marketing expenses reaching $49.3 million, the company is clearly investing heavily in growth and customer acquisition. However, the question remains whether these efforts will translate into long-term viability. As investors weigh the potential against the risks, understanding the fundamentals of Root Inc is crucial to making informed decisions. Despite some lackluster fundamentals, Root Inc. might be nearing a pivotal turnaround that could boost its stock price by December 2024. The company's risk of financial instability is below 27%, which is relatively moderate. The big question is whether individual investors will keep buying into Root during December.
Typically, a company's financial statements are the reports that show the financial position of the company. There are three main documents that fall into the category of financial statements. These documents include Root income statement, its balance sheet, and the statement of cash flows. Potential Root investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although Root investors may use each financial statement separately, they are all related. The changes in Root's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Root's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.
The goal of Root fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of Root performance into the future periods or doing a reasonable stock valuation. The intrinsic value of Root shares is the value that is considered the true value of the share. If the intrinsic value of Root is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares Root. Please read more on our fundamental analysis page.

How effective is Root in utilizing its assets?

Root Inc reports assets on its Balance Sheet. It represents the amount of Root resources that either has an existing economic value or will provide some form of benefits in the future. By effectively utilizing its assets, Root aims to generate revenue, control costs, drive operational efficiency, and enhance profitability. Optimizing asset utilization helps maximize shareholder value and maintain a competitive position in the Property & Casualty Insurance space. To get a better handle on how balance sheet or income statements item affect Root volatility, please check the breakdown of all its fundamentals.

Are Root Earnings Expected to grow?

The future earnings power of Root involves the interaction of many company-specific, industry, and economic forces. Earnings estimates embody investors' opinions of Root factors such as sales growth, product demand, competitive industry environment, profit margins, and cost controls. Root stock prices adjust as these expectations change or are proven wrong. The main thing to remember is that equities with high expected earnings growth tend to underperform the market because it is usually difficult to meet the market's high expectations. Companies with low earnings expectations tend to do better than expected. Please use our latest analysis of Root expected earnings.

Root Gross Profit

Root Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Root previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Root Gross Profit growth over the last 10 years. Please check Root's gross profit and other fundamental indicators for more details.

A Deeper look at Root

Although in the United States, the Securities and Exchange Commission has enforced strong rules to prevent insiders from engaging in insider trading, finding insiders among active shareholders of Root is not uncomon. Institutional investors typically avoid acquiring a high percentage of Root stocks because performing such an act may violate securities laws. They are usually not investing their own money, but rather making investments on behalf of their clients. Let's take a look at how the ownership of Root is distributed among investors.

Ownership Allocation

The market capitalization of Root Inc is $1.11 Billion. Over half of Root's outstanding shares are owned by third-party entities. These third-party entities are typically referred to as corporate investors that secure positions in a given instrument to benefit from reduced trade commissions. Note, that even with negative profits, if the true value of the company is larger than the current market value, you may still be able to generate positive returns on investment in this company.
Retail Investors
25.5%		Insiders
12.93%		Institutions
61.57%
Retail Investors25.5
Insiders12.93
Institutions61.57
Please be aware that individual investors typically purchase shares for their personal accounts and usually in smaller quantities compared to institutional investors. While they might influence Root's decisions if they own a significant combined portion of its shares, such influence is relatively rare. Conversely, institutional investors - like mutual funds, pension funds, hedge funds, and other investment companies - often have a substantial sway over Root's decisions due to their larger holdings.

Asset Utilization

The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Root has an asset utilization ratio of 38.75 percent. This implies that the Company is making $0.39 for each dollar of assets. An increasing asset utilization means that Root Inc is more efficient with each dollar of assets it utilizes for everyday operations.
Other Current Assets
832.4 M		Total Current Assets
992.6 M
Net Tangible Assets344.98 Million12.15
Non Current Assets Total163.07 Million5.74
Non Currrent Assets Other220.92 Million7.78
Other Assets263.24 Million9.27
Other Current Assets832.44 Million29.31
Total Current Assets992.62 Million34.95
Intangible Assets22.53 Million0.79
A rising tide lifts all boats, but not every vessel is seaworthy. Root Inc (NASDAQ: ROOT) has recently experienced a notable price surge, prompting investors to scrutinize its long-term potential. Despite a strong current ratio of 3.92X, indicating solid short-term liquidity, the company faces challenges with an operating income loss of 147.4 million. Furthermore, the probability of bankruptcy stands at a concerning 76.73%, casting doubt on its financial stability. While the market capitalization of 1.11 billion suggests some investor confidence, potential investors should weigh these fundamentals carefully before making a decision.

Our take on today Root gain

Root Inc's stock has seen a promising rise today, despite facing a steep maximum drawdown of 68.98%. This uptick offers a glimmer of hope for investors who have endured significant volatility. While the path to recovery may be lengthy, today's positive movement hints at a possible change in market sentiment. It serves as a reminder that even in tough times, opportunities exist for those who look beyond immediate figures to the bigger picture. Investors should stay alert and informed as they navigate these fluctuations.
Root Inc is experiencing above-average volatility, which can help investors time the market. Understanding these trends allows traders to assess Root's stock risk during both market upswings and downturns, potentially leading to strategic portfolio adjustments.While Root Inc's recent price surge might catch the eye of eager investors, it's crucial to approach with caution. The company's EPS estimates for the current and next year are projected at -1.38 and -1.79, respectively, indicating ongoing financial challenges. Furthermore, the valuation market value stands at 73.78, which suggests that the stock might be overvalued compared to its real value of 31.7. With only one strong buy recommendation from analysts, the enthusiasm for Root Inc appears limited. Investors should weigh these factors carefully and consider whether the potential risks align with their investment strategy before diving in..

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Editorial Staff

Gabriel Shpitalnik is a Member of Macroaxis Editorial Board. Gabriel is a young entrepreneur and writes predominantly on the business, technology, and finance sector. He likes to analyze different equity instruments across a wide range of industries focusing primarily on consumer products and evolving technologies. View Profile
This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Gabriel Shpitalnik do not own shares of Root Inc. Please refer to our Terms of Use for any information regarding our disclosure principles.

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