Root (NASDAQ:ROOT) Releases Earnings Results, Beats Estimates By $0.66 EPS

Root (NASDAQ:ROOT) released its quarterly earnings results on Wednesday. The company reported $1.49 EPS for the quarter, beating the consensus estimate of $0.83 by $0.66, FiscalAI reports. The firm had revenue of $389.20 million during the quarter, compared to the consensus estimate of $395.14 million. Root had a net margin of 3.58% and a return on equity of 19.97%. Root’s revenue for the quarter was up 1.6% on a year-over-year basis. During the same quarter in the prior year, the firm earned $1.29 EPS.

Here are the key takeaways from Root’s conference call:

• Profitability remained strong: second-quarter net income rose 15% year over year to $25 million, revenue increased 2% to $389 million, and the net combined ratio improved to 92.1%.
• Growth moderated as direct-market competition intensified, with gross written premium down 2% year over year and a sequential decline in policies in force. Management said 2026 year-end policies in force could be roughly flat year over year if current conditions persist.
• Root is expanding its growth channels, with partnerships and independent agents accounting for approximately 51% of new writings versus 44% a year ago. New Jersey launched in July, bringing Root to 37 states and more than 80% of the addressable population, with a near-national footprint targeted by the end of 2027.
• Management expects to launch a new predictive pricing model in the fourth quarter, supported by proprietary data from more than 37 billion driving miles and 900,000 claims. The company believes improved segmentation and AI-enabled automation can strengthen pricing, claims, customer service, and long-term growth.
• Root expects to invest approximately $10 million in second-half R&D and cautioned that loss ratios typically rise seasonally in the second half. The 26% second-quarter net expense ratio benefited partly from lower performance-based equity compensation and should not be treated as a normalized run rate.

Root Price Performance

ROOT stock traded up $1.16 on Wednesday, reaching $60.28. 247,857 shares of the company’s stock were exchanged, compared to its average volume of 200,565. The stock has a fifty day moving average of $57.11 and a 200-day moving average of $55.37. Root has a twelve month low of $40.91 and a twelve month high of $128.26. The firm has a market cap of $954.23 million, a PE ratio of 18.05 and a beta of 2.89. The company has a quick ratio of 1.07, a current ratio of 1.07 and a debt-to-equity ratio of 0.61.

Analyst Ratings Changes

ROOT has been the topic of several research reports. Wells Fargo & Company raised their price objective on shares of Root from $58.00 to $61.00 and gave the stock an “equal weight” rating in a research report on Thursday, July 9th. Zacks Research raised shares of Root from a “strong sell” rating to a “hold” rating in a report on Monday, June 8th. TD Cowen reiterated a “hold” rating on shares of Root in a research note on Wednesday, June 17th. Weiss Ratings upgraded shares of Root from a “hold (c-)” rating to a “hold (c)” rating in a research note on Tuesday, July 28th. Finally, UBS Group set a $50.00 price target on Root and gave the stock a “neutral” rating in a report on Monday, May 11th. Two research analysts have rated the stock with a Buy rating and five have issued a Hold rating to the company. According to MarketBeat.com, the company presently has a consensus rating of “Hold” and an average price target of $86.00.

Institutional Investors Weigh In On Root

Hedge funds and other institutional investors have recently bought and sold shares of the business. T. Rowe Price Investment Management Inc. boosted its position in shares of Root by 8.5% during the 4th quarter. T. Rowe Price Investment Management Inc. now owns 946,632 shares of the company’s stock worth $68,376,000 after purchasing an additional 74,427 shares in the last quarter. Geode Capital Management LLC increased its holdings in shares of Root by 4.1% in the 4th quarter. Geode Capital Management LLC now owns 310,967 shares of the company’s stock valued at $22,466,000 after purchasing an additional 12,238 shares in the last quarter. State Street Corp increased its holdings in shares of Root by 5.0% in the 4th quarter. State Street Corp now owns 258,168 shares of the company’s stock valued at $18,647,000 after purchasing an additional 12,321 shares in the last quarter. UBS Group AG increased its holdings in shares of Root by 372.1% in the 3rd quarter. UBS Group AG now owns 228,738 shares of the company’s stock valued at $20,474,000 after purchasing an additional 180,289 shares in the last quarter. Finally, Millennium Management LLC lifted its stake in shares of Root by 780.1% in the fourth quarter. Millennium Management LLC now owns 220,815 shares of the company’s stock valued at $15,949,000 after purchasing an additional 195,725 shares during the period. Institutional investors and hedge funds own 59.82% of the company’s stock.

About Root

Root, trading on the Nasdaq under the ticker ROOT, is a Columbus, Ohio–based insurance company that leverages mobile technology and data analytics to offer personalized auto insurance policies. Founded in 2015 by Alex Timm and Dan Manges, Root set out to transform traditional underwriting by focusing on individual driving behavior rather than broad demographic factors.

The company’s core product is usage-based auto insurance, delivered through a smartphone app that monitors driving patterns such as speed, braking and phone usage behind the wheel.