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

ROOT INC-CL A (NASDAQ:ROOT) was identified by our stock screener as a potential candidate for growth investors following Louis Navellier's "Little Book That Makes You Rich" strategy. The company, a tech-driven insurance provider, meets several key criteria outlined in the book, particularly in earnings momentum, sales growth, and cash flow expansion. Below, we examine why ROOT stands out.

Key Strengths Based on Navellier’s Criteria

• Earnings Revisions & Surprises: Analysts have raised next-quarter EPS estimates by 410.39% over the past three months, signaling strong confidence. Additionally, ROOT has beaten EPS estimates in all of the last four quarters, with an average surprise of 223.67%.
• Sales Growth: Revenue growth remains robust, with year-over-year (TTM) sales up 98.66% and quarterly sales rising 37.07% compared to the same period last year.
• Operating Margin Expansion: The company’s operating margin improved by 185.34% over the past year, indicating better cost efficiency alongside revenue growth.
• Strong Cash Flow: Free cash flow surged 178.07% year-over-year, providing financial flexibility to sustain growth.
• Earnings Momentum: Quarterly EPS growth accelerated to 354.76%, far outpacing the 85.42% growth seen in the same quarter a year ago.
• High ROE: Return on equity stands at 13.71%, above the 10% threshold set in the screening criteria.

Fundamental Overview

ROOT’s full fundamental report highlights a mixed picture. While profitability metrics are weak compared to industry peers, the company shows strong growth in earnings and revenue. Valuation remains expensive, with a P/E ratio of 37.98, but this may be justified by expected EPS growth of 37.55% in the coming years. Financial health is stable, though liquidity ratios are below ideal levels.

Our Little Book screener lists more stocks matching these criteria and is updated regularly.

Disclaimer

This is not investing advice. The observations here are based on data available at the time of writing. Always conduct your own research before making investment decisions.