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Kinsale Stock Trades Below 50-Day SMA: What Should Investors Know?
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Kinsale Capital (KNSL - Free Report) has been trading below its 50-day simple moving average (SMA), signaling a short-term bearish trend. As of Jan. 17, 2025, its share price was $436.34, down 20.4% from its 52-week high of $548.47
The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as it is the first marker of an uptrend or downtrend.
With a market capitalization of $10.2 billion, Kinsale is set to grow on the excess and surplus lines of business, high retention rates arising from renewals and a lower loss ratio.
KNSL Trading Below 50-Day Moving Average
Image Source: Zacks Investment Research
How KNSL Stock Performed in 6 Months
Shares of Kinsale have gained 16.9% in the past six months, underperforming its industry’s increase of 17.3%. It outperformed the sector’s rise of 10% and the Zacks S&P 500 composite’s gain of 8.2% in the same time frame.
KNSL Vs. Industry, Sector and S&P 500 in 6 Months
Image Source: Zacks Investment Research
Based on short-term price targets offered by nine analysts, the Zacks average price target is $477 per share. The average suggests a potential 8.9% upside from Friday’s closing price.
Optimistic Growth Projection for KNSL
The Zacks Consensus Estimate for 2025 earnings of $18.20 implies a 16.1% year-over-year increase on 15.1% higher revenues of $1.3 billion.
KNSL has a Growth Score of B. The expected long-term earnings growth rate is pegged at 15%, better than the industry average of 11.1%.
KNSL’s Growth Strategy
A strong presence across the E&S market in the United States and high retention rates stemming from contract renewals should drive improved premiums. Management noted that the E&S market has grown significantly and generated better underwriting results than the broader P&C industry. It remains well-poised to benefit from continued market dislocation, aiding improved submission flows and better pricing decisions.
KNSL has been successfully delivering improved margins and lower loss ratios. The insurer targets clients with small and medium-sized accounts, offering better pricing and being less prone to competition. Management estimates low double-digit rate increases across the book of business.
Kinsale enjoys the best combination of high growth and low combined ratio among its peers. It targets a combined ratio in the mid-80s range over the long term. KNSL is well poised to generate an improved expense ratio given its proprietary technology platform, which is likely to provide it with a competitive edge over other industry players and scalability in business. The insurer drives profitability and operational efficiency using analytics.
Amid a low interest rate environment, investment income should benefit from the investment of excess operating funds.
Notably, its free cash flow conversion has remained more than 85% over the last several quarters, reflecting its solid earnings.
KNSL’s Favorable Return on Capital
Kinsale’s return on equity (ROE) for the trailing 12 months is 28.7%, comparing favorably with the industry’s 7.6% and reflecting the company’s efficiency in utilizing shareholders’ funds. The insurer targets mid-teens ROE over the long term.
Also, return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame, reflecting KNSL’s efficiency in utilizing funds to generate income. ROIC for the trailing 12 months was 24.5%, comparing favorably with the industry’s 5.8%.
KNSL Shares Are Expensive
Its shares are trading at a premium to the Zacks Property and Casualty Insurance industry. Its price-to-book value of 7.08X is higher than the industry average of 1.71X.
Shares of other insurers like Ryan Specialty (RYAN - Free Report) are also trading at a multiple higher than the industry average while shares of Everest Group (EG - Free Report) and Corebridge Financial (CRBG - Free Report) are trading at a discount to the industry.
Parting Thoughts on KNSL Stock
Kinsale Capital is poised to gain from its focus on the excess and supply market, prudent underwriting, lower expense ratio, growth in the investment portfolio and effective capital deployment.
The insurer has an impressive dividend history. It has increased dividends since 2017 at a seven-year CAGR (2017-2024) of 12%, riding on the strength of operational excellence that supports its solid capital position.
Image: Bigstock
Kinsale Stock Trades Below 50-Day SMA: What Should Investors Know?
Kinsale Capital (KNSL - Free Report) has been trading below its 50-day simple moving average (SMA), signaling a short-term bearish trend. As of Jan. 17, 2025, its share price was $436.34, down 20.4% from its 52-week high of $548.47
The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as it is the first marker of an uptrend or downtrend.
With a market capitalization of $10.2 billion, Kinsale is set to grow on the excess and surplus lines of business, high retention rates arising from renewals and a lower loss ratio.
KNSL Trading Below 50-Day Moving Average
Image Source: Zacks Investment Research
How KNSL Stock Performed in 6 Months
Shares of Kinsale have gained 16.9% in the past six months, underperforming its industry’s increase of 17.3%. It outperformed the sector’s rise of 10% and the Zacks S&P 500 composite’s gain of 8.2% in the same time frame.
KNSL Vs. Industry, Sector and S&P 500 in 6 Months
Image Source: Zacks Investment Research
Based on short-term price targets offered by nine analysts, the Zacks average price target is $477 per share. The average suggests a potential 8.9% upside from Friday’s closing price.
Optimistic Growth Projection for KNSL
The Zacks Consensus Estimate for 2025 earnings of $18.20 implies a 16.1% year-over-year increase on 15.1% higher revenues of $1.3 billion.
KNSL has a Growth Score of B. The expected long-term earnings growth rate is pegged at 15%, better than the industry average of 11.1%.
KNSL’s Growth Strategy
A strong presence across the E&S market in the United States and high retention rates stemming from contract renewals should drive improved premiums. Management noted that the E&S market has grown significantly and generated better underwriting results than the broader P&C industry. It remains well-poised to benefit from continued market dislocation, aiding improved submission flows and better pricing decisions.
KNSL has been successfully delivering improved margins and lower loss ratios. The insurer targets clients with small and medium-sized accounts, offering better pricing and being less prone to competition. Management estimates low double-digit rate increases across the book of business.
Kinsale enjoys the best combination of high growth and low combined ratio among its peers. It targets a combined ratio in the mid-80s range over the long term.
KNSL is well poised to generate an improved expense ratio given its proprietary technology platform, which is likely to provide it with a competitive edge over other industry players and scalability in business. The insurer drives profitability and operational efficiency using analytics.
Amid a low interest rate environment, investment income should benefit from the investment of excess operating funds.
Notably, its free cash flow conversion has remained more than 85% over the last several quarters, reflecting its solid earnings.
KNSL’s Favorable Return on Capital
Kinsale’s return on equity (ROE) for the trailing 12 months is 28.7%, comparing favorably with the industry’s 7.6% and reflecting the company’s efficiency in utilizing shareholders’ funds. The insurer targets mid-teens ROE over the long term.
Also, return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame, reflecting KNSL’s efficiency in utilizing funds to generate income. ROIC for the trailing 12 months was 24.5%, comparing favorably with the industry’s 5.8%.
KNSL Shares Are Expensive
Its shares are trading at a premium to the Zacks Property and Casualty Insurance industry. Its price-to-book value of 7.08X is higher than the industry average of 1.71X.
Shares of other insurers like Ryan Specialty (RYAN - Free Report) are also trading at a multiple higher than the industry average while shares of Everest Group (EG - Free Report) and Corebridge Financial (CRBG - Free Report) are trading at a discount to the industry.
Parting Thoughts on KNSL Stock
Kinsale Capital is poised to gain from its focus on the excess and supply market, prudent underwriting, lower expense ratio, growth in the investment portfolio and effective capital deployment.
The insurer has an impressive dividend history. It has increased dividends since 2017 at a seven-year CAGR (2017-2024) of 12%, riding on the strength of operational excellence that supports its solid capital position.
However, given its expensive valuation, it is better to wait for some more time before taking a call on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.