Kingstone Companies Stock Skyrockets 679% YTD: Time to Buy?

Shares of Kingstone Companies KINS have rallied 678.9% year to date, zooming past the industry’s increase of 32.1%, the Finance sector’s rise of 23.3% and the Zacks S&P 500 composite’s gain of 27.2% in the same time frame. Ranked by S&P as the 15th largest homeowner insurer in New York in 2023 with a market share of 1.6%, Kingstone Companies is poised to gain from the $200 million market opportunity with its competing carriers exiting the personal property market countrywide in July 2024.This company has a market capitalization of $205 million. The average volume of shares traded in the last three months was 0.2 million.KINS Outperforms Industry, Sector & S&P YTDImage Source: Zacks Investment ResearchKINS Trading Above 50-Day Moving AverageKINS shares are trading well above the 50-day moving average, indicating a bullish trend. Shares are trading near the high end of its 52-week range.  KINS Price Movement vs. 50-Day Moving AverageImage Source: Zacks Investment ResearchOptimistic Analyst Sentiment for KINSThe Zacks Consensus Estimate for 2024 and 2025 earnings has moved 2.9% and 25% north, respectively, in the past 30 days.Image Source: Zacks Investment ResearchThe consensus estimate for 2024 implies a 291.8% year-over-year increase, while the same for 2025 suggests a 10.7% increase. The company has a Growth Score of A. KINS now expects 2024 earnings per share between $1.40 and $1.70 in 2024 and $1.60 and $2.00 in 2025.KINS’ Growth StrategyKingstone Companies’ growth strategy involves increasing focus on core business while prudently scaling back on unprofitable non-core business. It has been successful in having a price increase ahead of inflation, matching prices to risks. This Northeast regional property and casualty insurer has partnered with Earnix to enhance its pricing capabilities and support its strategic growth initiatives.The insurer only writes businesses that meet its underwriting standards and profit-margin objectives.KINS expects direct written premium in core business to grow between 25% and 35% in 2024 and between 15% and 25% in 2025.KINS’ efforts to drive higher average premiums, along with lowering commissions and staffing, helped it to lower its net underwriting expense ratio. With continued focus on lowering expenses, it now expects net expense ratio to be less than 31% in 2024. Kingstone Companies has a solid reinsurance program in place that shields its balance sheet from erosion. It has strengthened its balance sheet by improving its cash balance while lowering debt. KINS’ Return on CapitalReturn on equity in the trailing 12 months was 32.6%, higher than the industry average of 7.6%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.Image Source: Zacks Investment ResearchKINS now expects ROE between 32% and 36% in 2024 and 24-32% in 2025.Its return on invested capital (ROIC) has been improving for quite some time. This reflects KINS’ efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 27%, higher than the industry average of 5.8%.Image Source: Zacks Investment ResearchKINS Shares Are ExpensiveThe stock is overvalued compared to its industry. It is currently trading at a price-to-book multiple of 3.08, higher than the industry average of 1.60. Image Source: Zacks Investment ResearchIt also has a Value Score of A. Back-tested results have shown that stocks with a solid Value Score and a favorable Zacks Rank are the most attractive and their returns are better. Shares of other insurers like Heritage Insurance Holdings, Inc. HRTG and ROOT Inc. ROOT are also trading at a multiple higher than the industry average.ConclusionKINS’ focus on its core business and on improving pricing and combined ratio, expanding margins and delivering strong earnings bodes well for growth.  The average target price of $17 reflects a 4.6% upside potential to Wednesday's closing price. Despite its expensive valuation, given the positive analyst sentiment, its growth prospects and its VGM Score of A, the time appears right for potential investors to bet on this Zacks Rank #1 (Strong Buy) insurer. You can see the complete list of today’s Zacks #1 Rank stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Heritage Insurance Holdings, Inc. (HRTG): Free Stock Analysis Report Kingstone Companies, Inc (KINS): Free Stock Analysis Report Root, Inc. (ROOT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks