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Root vs. EverQuote: Which Stock Is the Stronger Bet in Insurtech?
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Key Takeaways
Root marked its first profitable year in 2024 with improved margins and a lower gross loss ratio.
EverQuote projects Q3 2025 revenues between $155M and $160M, aided by rising auto carrier demand.
ROOT expects 2025 EPS to be up 43.4%, while EVER sees 48.9% revenue growth and 30% EPS gain.
InsurTechs or technology-led insurers are trying hard to be game changers, leveraging technologies like AI, telematics, data-driven underwriting and machine learning, among others. Yet, ROOT Inc. (ROOT - Free Report) and EverQuote Inc. (EVER - Free Report) — two U.S.-based insurTech companies — continue to face challenges due to lowered interest rates, increased competition, inflation, higher cost of repair and increased pressure to achieve and sustain profitability. Given heightened regulatory scrutiny with respect to data and pricing models, InsurTechs are looking to invest in regtech solutions to overcome compliance-related challenges.
InsurTechs use the latest technologies and concepts. However, traditional insurers are also undergoing accelerated digitalization, limiting the advantage these InsurTechs enjoyed earlier.
Coming back to ROOT and EVER, let’s examine their fundamentals closely to determine which one is more attractive as an investment option.
Factors to Consider for ROOT
Root primarily operates in the auto insurance market, leveraging telematics and data-driven pricing models to differentiate itself. The company’s growth strategy is centered on geographic expansion, broader distribution and targeted investments in high-return opportunities. Policies in force have steadily increased, reflecting momentum across business lines. Root continues to scale its automotive, financial services, and agent sub-channels, which are fueling strong growth within its Partnership channel. Meanwhile, its Direct channel benefits from disciplined customer acquisition spending.
On the financial front, Root has been tightly managing fixed expenses while selectively investing in marketing to support profitability. A key catalyst is the expected refinancing of its debt facility with BlackRock in October 2024, which is projected to cut interest expenses by 50% in 2025. Margins have also improved, with the net margin expanding by 15,350 basis points over the past three years. The last year turned out to be the company’s first profitable year.
Operationally, Root has successfully lowered its gross loss ratio, keeping it under the long-term target of 60-65%. This efficiency has enabled the insurer to reduce rates in certain states without compromising returns.
However, its elevated debt levels remain a concern. The company’s leverage ratio and time interest earned compare unfavorably with the industry averages, highlighting financial risks despite its improving performance.
ROOT’s return on equity of 38.24%, however, betters the industry average of 8.3%.
Factors to Consider for EVER
EverQuote is leading online marketplace for insurance shopping, connecting consumers with our insurance provider customers and envisions to be the leading growth partner for property and casualty insurance providers.
The company believes it is well-positioned to benefit from the normalization of auto insurance carrier demand, given the auto carrier recovery. It also remains focused on rapidly expanding into new verticals. While it expects to benefit from the shift to online insurance sales, it remains focused on the growth of consumer traffic and the addition of channels. EverQuote expects revenues to be between $155 million and $160 million in the third quarter of 2025.
The success of the company depends on the growth of consumer traffic, as measured by quote requests. EverQuote remains focused on increasing consumer traffic by expanding existing advertising channels and adding new channels. Per S&P Global Market Intelligence, as of 2023, distribution and advertising spend is estimated around $117 billion annually in U.S. P&C Insurance Market. This provides tailwind for EVER.
EverQuote is increasingly leveraging AI-driven efficiency to enhance its operations. Its marketplace runs on a proprietary data and technology platform that attracts insurance shoppers from a broad and diverse range of sources, combining internally developed, third-party and open-source software. EVER continues to expand its use of data assets and machine learning, while introducing copilots and AI-powered voice agents to streamline workflows.
In addition, it is testing AI agents to automate operational processes. By integrating its data science expertise with proprietary data assets and scalable machine learning-based automation, EverQuote aims to build a durable competitive edge. Management expects strong cash flow generation to fund ongoing investments in AI, technology and data capabilities, with accelerated deployment planned for the second half of 2025 to drive efficiency and reinforce EverQuote’s long-term competitive moat.
The company boasts a debt-free balance sheet, with its cash balance improving over the last three years. Its board approved a $50-million share buyback program that expires in June 2026. Its return on equity is 36.9% and betters the industry average.
Estimates for ROOT and EVER
The Zacks Consensus Estimate for ROOT’s 2025 revenues and EPS implies a year-over-year increase of 16.4% and 43.4%, respectively. EPS estimates have moved 30.1% south over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for EVER’s 2025 revenues and EPS implies a year-over-year increase of 48.9% and 30%, respectively. EPS estimates have moved 12% north over the past 60 days.
Image Source: Zacks Investment Research
Are ROOT and EVER Shares Expensive?
ROOT is trading at a price-to-book multiple of 6.38, above its median of 3.31 over the last three years. EVER’s price-to-book multiple sits at 5.33, above its median of 5.17 over the last three years.
Image Source: Zacks Investment Research
Conclusion
ROOT envisions being the largest and most profitable company in the industry. The insurer achieved operational efficiency by increasing its investments in pricing and underwriting technologies — a strategy ROOT plans to continue. These technological advancements have been key drivers of the company's growth. Additionally, its active reinsurance policy supports loss mitigation and helps sustain profitability.
EverQuote should continue to benefit from its exclusive data asset and technology, intensified focus on core P&C markets, streamlined operations and a strong financial profile that positions it for long-term growth.
Shares of ROOT have surged 39.1% year to date, while those of EVER have gained 24.4% in the same time frame. ROOT stock carries a Zacks Rank #5 (Strong Sell), while EVER carries a Zacks Rank #3 (Hold). Clearly, EVER seems a better pick than ROOT at present.
Image: Bigstock
Root vs. EverQuote: Which Stock Is the Stronger Bet in Insurtech?
Key Takeaways
InsurTechs or technology-led insurers are trying hard to be game changers, leveraging technologies like AI, telematics, data-driven underwriting and machine learning, among others. Yet, ROOT Inc. (ROOT - Free Report) and EverQuote Inc. (EVER - Free Report) — two U.S.-based insurTech companies — continue to face challenges due to lowered interest rates, increased competition, inflation, higher cost of repair and increased pressure to achieve and sustain profitability. Given heightened regulatory scrutiny with respect to data and pricing models, InsurTechs are looking to invest in regtech solutions to overcome compliance-related challenges.
InsurTechs use the latest technologies and concepts. However, traditional insurers are also undergoing accelerated digitalization, limiting the advantage these InsurTechs enjoyed earlier.
Coming back to ROOT and EVER, let’s examine their fundamentals closely to determine which one is more attractive as an investment option.
Factors to Consider for ROOT
Root primarily operates in the auto insurance market, leveraging telematics and data-driven pricing models to differentiate itself. The company’s growth strategy is centered on geographic expansion, broader distribution and targeted investments in high-return opportunities. Policies in force have steadily increased, reflecting momentum across business lines. Root continues to scale its automotive, financial services, and agent sub-channels, which are fueling strong growth within its Partnership channel. Meanwhile, its Direct channel benefits from disciplined customer acquisition spending.
On the financial front, Root has been tightly managing fixed expenses while selectively investing in marketing to support profitability. A key catalyst is the expected refinancing of its debt facility with BlackRock in October 2024, which is projected to cut interest expenses by 50% in 2025. Margins have also improved, with the net margin expanding by 15,350 basis points over the past three years. The last year turned out to be the company’s first profitable year.
Operationally, Root has successfully lowered its gross loss ratio, keeping it under the long-term target of 60-65%. This efficiency has enabled the insurer to reduce rates in certain states without compromising returns.
However, its elevated debt levels remain a concern. The company’s leverage ratio and time interest earned compare unfavorably with the industry averages, highlighting financial risks despite its improving performance.
ROOT’s return on equity of 38.24%, however, betters the industry average of 8.3%.
Factors to Consider for EVER
EverQuote is leading online marketplace for insurance shopping, connecting consumers with our insurance provider customers and envisions to be the leading growth partner for property and casualty insurance providers.
The company believes it is well-positioned to benefit from the normalization of auto insurance carrier demand, given the auto carrier recovery. It also remains focused on rapidly expanding into new verticals. While it expects to benefit from the shift to online insurance sales, it remains focused on the growth of consumer traffic and the addition of channels. EverQuote expects revenues to be between $155 million and $160 million in the third quarter of 2025.
The success of the company depends on the growth of consumer traffic, as measured by quote requests. EverQuote remains focused on increasing consumer traffic by expanding existing advertising channels and adding new channels. Per S&P Global Market Intelligence, as of 2023, distribution and advertising spend is estimated around $117 billion annually in U.S. P&C Insurance Market. This provides tailwind for EVER.
EverQuote is increasingly leveraging AI-driven efficiency to enhance its operations. Its marketplace runs on a proprietary data and technology platform that attracts insurance shoppers from a broad and diverse range of sources, combining internally developed, third-party and open-source software. EVER continues to expand its use of data assets and machine learning, while introducing copilots and AI-powered voice agents to streamline workflows.
In addition, it is testing AI agents to automate operational processes. By integrating its data science expertise with proprietary data assets and scalable machine learning-based automation, EverQuote aims to build a durable competitive edge. Management expects strong cash flow generation to fund ongoing investments in AI, technology and data capabilities, with accelerated deployment planned for the second half of 2025 to drive efficiency and reinforce EverQuote’s long-term competitive moat.
The company boasts a debt-free balance sheet, with its cash balance improving over the last three years. Its board approved a $50-million share buyback program that expires in June 2026. Its return on equity is 36.9% and betters the industry average.
Estimates for ROOT and EVER
The Zacks Consensus Estimate for ROOT’s 2025 revenues and EPS implies a year-over-year increase of 16.4% and 43.4%, respectively. EPS estimates have moved 30.1% south over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for EVER’s 2025 revenues and EPS implies a year-over-year increase of 48.9% and 30%, respectively. EPS estimates have moved 12% north over the past 60 days.
Image Source: Zacks Investment Research
Are ROOT and EVER Shares Expensive?
ROOT is trading at a price-to-book multiple of 6.38, above its median of 3.31 over the last three years. EVER’s price-to-book multiple sits at 5.33, above its median of 5.17 over the last three years.
Image Source: Zacks Investment Research
Conclusion
ROOT envisions being the largest and most profitable company in the industry. The insurer achieved operational efficiency by increasing its investments in pricing and underwriting technologies — a strategy ROOT plans to continue. These technological advancements have been key drivers of the company's growth. Additionally, its active reinsurance policy supports loss mitigation and helps sustain profitability.
EverQuote should continue to benefit from its exclusive data asset and technology, intensified focus on core P&C markets, streamlined operations and a strong financial profile that positions it for long-term growth.
Shares of ROOT have surged 39.1% year to date, while those of EVER have gained 24.4% in the same time frame. ROOT stock carries a Zacks Rank #5 (Strong Sell), while EVER carries a Zacks Rank #3 (Hold). Clearly, EVER seems a better pick than ROOT at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.