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KNSL Trading at a Premium to Industry: How Should You Play the Stock?
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Kinsale Capital Group, Inc. (KNSL - Free Report) shares are trading at a premium to the Zacks Property and Casualty Insurance industry. Its price-to-book value of 6.47X is higher than the industry average of 1.52X and the Finance sector’s 4.11X.
Shares of The Travelers Companies, Inc. (TRV - Free Report) and Cincinnati Financial Corporation (CINF - Free Report) are also trading at a multiple higher than the industry average, while NMI Holdings Inc. (NMIH - Free Report) shares are trading at a discount.
Image Source: Zacks Investment Research
Kinsale Capital shares have gained 14.3% in the past year, underperforming its industry and the Finance sector’s growth of 21.8% and 17.1%, respectively. It, however, outperformed the Zacks S&P 500 composite’s return of 10.9%.
KNSL Outperform S&P 500, Lags Industry & Sector and in 1 Year
Image Source: Zacks Investment Research
With a market capitalization of $10.23 billion, the average volume of shares traded in the last three months was 0.2 million.
Closing at $438.99 on Wednesday, the stock stands below its 52-week high of $531.79. The stock is trading below the 50-day and 200-day simple moving averages (SMA) of $462.29 and $462.81, respectively, indicating downward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
KNSL Price Movement vs. 50-Day Moving Average
Image Source: Zacks Investment Research
KNSL’s Growth Projection Encourages
The Zacks Consensus Estimate for Kinsale Capital’s 2025 earnings per share indicates a year-over-year increase of 10%. The consensus estimate for revenues is pegged at $1.75 billion, implying a year-over-year improvement of 10.2%.
The consensus estimate for 2026 earnings per share and revenues indicates an increase of 14.8% and 12.5%, respectively, from the corresponding 2025 estimates.
Earnings have grown 44.3% in the past five years, better than the industry average of 18.9%. The expected long-term earnings growth rate is 15%, outperforming the industry average of 6.9%.
Kinsale Capital has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.
Earnings Surprise History
Kinsale Capital surpassed earnings estimates in each of the last four quarters, the average being 11.07%.
KNSL’s Favorable Return on Capital
Kinsale Capital’s return on equity (ROE) of 26.3% for the trailing 12 months compared favorably with the industry’s 7.7%, reflecting the company’s efficiency in utilizing shareholders’ funds. This 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. KNSL’s ROIC of 22.7% for the trailing 12 months compared favorably with the industry’s 5.9%.
Key Drivers of KNSL Stock
A strong presence across the excess and supply (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-positioned 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-sized and medium-sized accounts with better pricing and is less prone to competition. Management estimates low double-digit rate increases across the book of business.
Kinsale Capital 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-positioned 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.
Despite 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 many quarters, reflecting its solid earnings.
Final Take on KNSL Stock
Kinsale Capital is poised to gain from its focus on the E&S market, prudent underwriting, lower expense ratio, growth in the investment portfolio and effective capital deployment.
The insurer has an impressive dividend history, increasing dividends since 2017 at a seven-year CAGR (2017-2024) of 12.1%, riding on the strength of operational excellence that supports a solid capital position. As part of wealth distribution, in October 2024, the board of directors authorized a share repurchase program authorizing the repurchase of up to $100 million of common stock. The stock also has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Image: Bigstock
KNSL Trading at a Premium to Industry: How Should You Play the Stock?
Kinsale Capital Group, Inc. (KNSL - Free Report) shares are trading at a premium to the Zacks Property and Casualty Insurance industry. Its price-to-book value of 6.47X is higher than the industry average of 1.52X and the Finance sector’s 4.11X.
Shares of The Travelers Companies, Inc. (TRV - Free Report) and Cincinnati Financial Corporation (CINF - Free Report) are also trading at a multiple higher than the industry average, while NMI Holdings Inc. (NMIH - Free Report) shares are trading at a discount.
Image Source: Zacks Investment Research
Kinsale Capital shares have gained 14.3% in the past year, underperforming its industry and the Finance sector’s growth of 21.8% and 17.1%, respectively. It, however, outperformed the Zacks S&P 500 composite’s return of 10.9%.
KNSL Outperform S&P 500, Lags Industry & Sector and in 1 Year
Image Source: Zacks Investment Research
With a market capitalization of $10.23 billion, the average volume of shares traded in the last three months was 0.2 million.
Closing at $438.99 on Wednesday, the stock stands below its 52-week high of $531.79. The stock is trading below the 50-day and 200-day simple moving averages (SMA) of $462.29 and $462.81, respectively, indicating downward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
KNSL Price Movement vs. 50-Day Moving Average
Image Source: Zacks Investment Research
KNSL’s Growth Projection Encourages
The Zacks Consensus Estimate for Kinsale Capital’s 2025 earnings per share indicates a year-over-year increase of 10%. The consensus estimate for revenues is pegged at $1.75 billion, implying a year-over-year improvement of 10.2%.
The consensus estimate for 2026 earnings per share and revenues indicates an increase of 14.8% and 12.5%, respectively, from the corresponding 2025 estimates.
Earnings have grown 44.3% in the past five years, better than the industry average of 18.9%. The expected long-term earnings growth rate is 15%, outperforming the industry average of 6.9%.
Kinsale Capital has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.
Earnings Surprise History
Kinsale Capital surpassed earnings estimates in each of the last four quarters, the average being 11.07%.
KNSL’s Favorable Return on Capital
Kinsale Capital’s return on equity (ROE) of 26.3% for the trailing 12 months compared favorably with the industry’s 7.7%, reflecting the company’s efficiency in utilizing shareholders’ funds. This 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. KNSL’s ROIC of 22.7% for the trailing 12 months compared favorably with the industry’s 5.9%.
Key Drivers of KNSL Stock
A strong presence across the excess and supply (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-positioned 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-sized and medium-sized accounts with better pricing and is less prone to competition. Management estimates low double-digit rate increases across the book of business.
Kinsale Capital 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-positioned 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.
Despite 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 many quarters, reflecting its solid earnings.
Final Take on KNSL Stock
Kinsale Capital is poised to gain from its focus on the E&S market, prudent underwriting, lower expense ratio, growth in the investment portfolio and effective capital deployment.
The insurer has an impressive dividend history, increasing dividends since 2017 at a seven-year CAGR (2017-2024) of 12.1%, riding on the strength of operational excellence that supports a solid capital position. As part of wealth distribution, in October 2024, the board of directors authorized a share repurchase program authorizing the repurchase of up to $100 million of common stock. The stock also has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
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.