This Small-Cap Growth Stock Has Surged 600% in 2024 and Its Recent Results Shocked Investors. Is the Stock a Buy Today?

Motley Fool11-07

Root, the technology-based auto insurer, has surged more than 600% during the past year as its profitability improves. The company has dramatically improved its loss ratios and turned an ...

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Is the Stock a Buy Today?","media":"Motley Fool","content":"<div>\n<p>Root, the technology-based auto insurer, has surged more than 600% during the past year as its profitability improves. \n\n\n\n\n\n\n\nThe company has dramatically improved its loss ratios and turned an ...</p>\n\n<a href=\"https://www.fool.com/investing/2024/11/07/this-small-cap-growth-stock-has-surged-603-in-2024/\">Source Link</a>\n\n</div>\n","source":"fool_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>This Small-Cap Growth Stock Has Surged 600% in 2024 and Its Recent Results Shocked Investors. Is the Stock a Buy Today?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThis Small-Cap Growth Stock Has Surged 600% in 2024 and Its Recent Results Shocked Investors. Is the Stock a Buy Today?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-07 20:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2024/11/07/this-small-cap-growth-stock-has-surged-603-in-2024/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Root, the technology-based auto insurer, has surged more than 600% during the past year as its profitability improves. \n\n\n\n\n\n\n\nThe company has dramatically improved its loss ratios and turned an ...</p>\n\n<a href=\"https://www.fool.com/investing/2024/11/07/this-small-cap-growth-stock-has-surged-603-in-2024/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"SSO","symbol_name":"两倍做多标普500ETF","start_time":0,"source_url":"https://www.fool.com/investing/2024/11/07/this-small-cap-growth-stock-has-surged-603-in-2024/","article_id":"2481010459","we_media_id":null,"thumbnails":["https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F796653%2Fperson-with-clipboard-reviews-automotive-damage-getty.jpg&op=resize&w=165&h=104"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2481010459","pubTimestamp":1730980800,"sourceInfo":{"source_id":"fool_stock","name":"Motley Fool"},"weMediaInfo":null,"summary":"This small-cap stock has skyrocketed after posting a surprising profit in the third quarter.","collect":0,"end_time":0,"defaultTopTitle":"fool.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"SSO":"两倍做多标普500ETF","BK4559":"巴菲特持仓","IVV":"标普500指数ETF","SPXU":"三倍做空标普500ETF","BK4588":"碎股","BK4550":"红杉资本持仓","OEF":"标普100指数ETF-iShares","BK4551":"寇图资本持仓","OEX":"标普100","SPY":"标普500ETF",".SPX":"S&P 500 Index","BK4505":"高瓴资本持仓","BK4581":"高盛持仓","BK4504":"桥水持仓","SDS":"两倍做空标普500ETF","VOO":"Vanguard标普500ETF","BK4107":"财产与意外伤害保险","ROOT":"Root, Inc.","UPRO":"三倍做多标普500ETF","BK4585":"ETF&股票定投概念","BK4534":"瑞士信贷持仓","SH":"标普500反向ETF","ISBC":"投资者银行","BK4211":"区域性银行"},"translate_title":"这只小盘成长股在2024年飙升了600%，其最近的业绩震惊了投资者。该股票今天值得买入吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ROOT":1,"ISBC":1,"VOO":0.61,"SPY":0.61,"ESmain":0.6,"UPRO":0.6,"SSO":0.6,"SPXU":0.6,"SH":0.6,"SDS":0.6,"OEX":0.6,"OEF":0.6,"IVV":0.6,".SPX":0.6},"content_text":"Root, the technology-based auto insurer, has surged more than 600% during the past year as its profitability improves. \n\n\n\n\n\n\n\nThe company has dramatically improved its loss ratios and turned an underwriting profit during the third quarter for the first time. \n\n\n\n\n\n\n\nIt crushed analysts' expectations amid an improving backdrop for insurers. \n\nThe stock market has soared higher in 2024, with the S&P 500 index up 21%. Against this backdrop, Root Inc. (ROOT 3.94%) has emerged as a breakout stock. This company isn't just riding the wave of growth -- it's making waves of its own, with the stock up more than 600% since the beginning of the year.Investors were pleasantly surprised when the company announced its first profitable quarter since going public, something few anticipated. If you're thinking of investing in this innovative growth stock today, consider the following.Root stunned investors with its third-quarter profitRoot is a tech-driven automotive insurance company that has gone on an absolute tear. The small company started the year with a bang when it posted better-than-expected revenue and earnings per share measures during its February earnings call. The stock went from $9 before the earnings report to nearly $84 in the weeks that followed.The company stated that its path to profitability was becoming more visible, which kicked off the stock's sharp rally. Now, investors are beginning to see that vision become a reality.Root shocked investors when it announced its third-quarter results on Oct. 30. The company posted net income of $22.8 million, or earnings per share (EPS) of $1.35, well above analysts' forecasts of  a loss per share of $0.98.In the third quarter, Root's net premiums earned were $279 million, representing growth of 180% from one year ago. Through the first three quarters of 2024, Root's premiums earned are $771 million, a 244% increase from last year.ROOT Revenue (Quarterly) data by YChartsRoot has made eye-opening progressWhen it comes to up-and-coming insurance companies, rapid growth tends to come at the cost of rising claims costs and expenses. However, this hasn't been the case with Root this year. The company has experienced stellar revenue growth and is managing expenses and keeping claims costs in check.At the core of Root's business is technology and data science. The company leverages driver behavior collected through its app, including speed, mileage driven, braking time, and other information. From there, it can use that data to price its policies. Chief Executive Officer Alex Timm told investors: \"We're constantly iterating on and innovating on what we believe to be one of the fastest paces in the industry.\"One crucial measure for insurers is the combined ratio, which is the ratio of claims costs plus expenses divided by premiums earned. A measure below 100% means an insurer is profitably underwriting policies, and the lower the ratio, the more profitable it is.Root's combined ratio was a stellar 91.1% in the third quarter. This not only rivals Progressive, one of the top auto insurers out there, but it was a vast improvement from one year ago when its quarterly combined ratio was 143%. Through the first three quarters of this year, Root's combined ratio is 98.3%. Image source: Getty Images.Is Root stock right for you?Root posted an excellent quarterly earnings report and has beaten analysts' estimates several quarters in a row. As a prospective investor, I find that growth encouraging, but I want to see if Root's stellar underwriting and policy growth can continue across different pricing environments.Last year, Root struggled alongside the entire property and casualty (P&C) industry, which had a combined loss of $24 billion in 2023. Things have improved across the industry; in 2024, P&C insurers have made a $3.8 billion underwriting gain, which has undoubtedly been a tailwind for insurers like Root.Investors who buy the stock should be aware of its high volatility. Beta measures a stock's risk relative to the market (with the S&P 500 as a commonly used benchmark). Stocks with a beta of less than 1 are considered less volatile than the market, while a higher beta indicates a more volatile stock. Root's beta is 3.5, meaning it is 250% more volatile than the S&P 500.Most investors may want to avoid this highly volatile stock and should consider investing in stable, established companies with long track records of success, like Progressive or Chubb. However, investors with a high risk tolerance and looking for innovative disruptors may see Root's substantial progress as a green light to buy today.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"2","news_tag":"Business Data","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2481010459"}