ROOT INC-CL A (NASDAQ:ROOT) – A Growth Stock Worth Watching

ROOT INC-CL A (NASDAQ:ROOT) was identified by our Louis Navellier-inspired growth stock screener as a potential candidate for investors seeking high-growth opportunities. The company, a technology-driven insurance provider, meets several key criteria outlined in Navellier’s strategy, particularly in earnings momentum, sales growth, and cash flow expansion. Below, we examine why ROOT stands out.

Key Strengths Based on Navellier’s Criteria

• Positive Earnings Revisions & Surprises: Analysts have raised EPS estimates for the next quarter by 222.2% over the last three months. Additionally, ROOT has beaten EPS estimates in all of the last four quarters, with an average surprise of 223.7%.
• Strong Sales Growth: Revenue grew 98.7% year-over-year, while quarterly sales increased 37.1%, indicating accelerating demand.
• Expanding Profitability: Operating margins improved by 185.3% over the past year, reflecting better cost management.
• Robust Cash Flow: Free cash flow surged 178.1% year-over-year, providing financial flexibility.
• High Earnings Growth: EPS grew 141.2% year-over-year and 354.8% quarter-over-quarter, showing strong momentum.
• Solid Return on Equity: ROOT’s ROE of 13.7% is above the 10% threshold set in the strategy.

Fundamental Overview

ROOT’s financial health is mixed. While profitability metrics like operating margin and ROE are solid, its valuation appears stretched with a P/E of 39.99, higher than most industry peers. The company’s growth trajectory is strong, but future revenue is expected to decline slightly (-8.3%), which warrants caution.

For a deeper look, review the full fundamental analysis report.

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Disclaimer

This is not investing advice. The observations here are based on current data, but investors should conduct their own research before making decisions.