Value
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.1 |
| P/S | 10.0 |
| EV/EBITDA | 7.8 |
| Fwd P/E | 6.7 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 19.0x
- ▸PEG: 0.19
- ▸Attractively valued
ROOT · Why this verdict
Why Root (ROOT) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Root pairs a cheap valuation and strong cash-conversion quality with a four-quarter earnings beat streak, but a negative risk-adjusted asymmetry ratio and an unconfirmed technical recovery keep the setup speculative until price reclaims its long-term trend.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Root trades at a forward P/E of 20.2x with a PEG ratio of 0.21, suggesting the market has not fully priced in its earnings growth trajectory. Valuation breakdown | The PEG ratio should stay well below 1.0 and the stock should re-rate higher as growth continues over the next 12 months. | ↑Improving |
| CounterThe low PEG may reflect skepticism about the durability of Root's underwriting profits rather than a genuine mispricing. | ||
Root has beaten consensus earnings estimates for four straight quarters with an average surprise of over 200%, showing execution ahead of expectations. Earnings | The beat streak should extend through the next reported quarter on 2026-08-05. | →Stable |
| CounterA history of outsized surprises can reflect conservative guidance-setting rather than durable operating strength, and the streak can break at any print. | ||
Root converts net income into free cash flow at 325% and carries a near-perfect Piotroski F-Score of 9 out of 9, pointing to strong balance-sheet health. Quality breakdown | FCF-to-net-income conversion should stay above 150% and the Piotroski score should remain at 8 or higher over the next year. | →Stable |
| CounterAn outsized single-quarter FCF conversion ratio can reflect working-capital timing rather than a repeatable structural advantage. | ||
Root's risk score of 2.7 sits below the 3.0 floor and the risk-adjusted asymmetry ratio is negative, reflecting a setup where 15% downside outweighs -5.9% upside from the current price of $61.73. Warnings | The asymmetry ratio should turn positive, with upside exceeding downside, for the setup to become attractive again. | ↑Improving |
| CounterThe point-in-time upside/downside snapshot is sensitive to analyst target revisions and could flip quickly if targets move higher. | ||
Root's price sits below its 200-day moving average after a death cross, but MACD is improving and RSI has recovered to 61, indicating an attempted technical recovery. Chart pattern detection | Price should reclaim the 200-day moving average and complete a golden cross within 12 months. | →Stable |
| CounterDeath crosses often precede extended downtrends, and an improving MACD off a depressed base is not proof the downtrend has reversed. | ||
Root trades at a forward P/E of 20.2x with a PEG ratio of 0.21, suggesting the market has not fully priced in its earnings growth trajectory.
↑ImprovingValuation breakdown
- Expectation
- The PEG ratio should stay well below 1.0 and the stock should re-rate higher as growth continues over the next 12 months.
CounterThe low PEG may reflect skepticism about the durability of Root's underwriting profits rather than a genuine mispricing.
Root has beaten consensus earnings estimates for four straight quarters with an average surprise of over 200%, showing execution ahead of expectations.
→StableEarnings
- Expectation
- The beat streak should extend through the next reported quarter on 2026-08-05.
CounterA history of outsized surprises can reflect conservative guidance-setting rather than durable operating strength, and the streak can break at any print.
Root converts net income into free cash flow at 325% and carries a near-perfect Piotroski F-Score of 9 out of 9, pointing to strong balance-sheet health.
→StableQuality breakdown
- Expectation
- FCF-to-net-income conversion should stay above 150% and the Piotroski score should remain at 8 or higher over the next year.
CounterAn outsized single-quarter FCF conversion ratio can reflect working-capital timing rather than a repeatable structural advantage.
Root's risk score of 2.7 sits below the 3.0 floor and the risk-adjusted asymmetry ratio is negative, reflecting a setup where 15% downside outweighs -5.9% upside from the current price of $61.73.
↑ImprovingWarnings
- Expectation
- The asymmetry ratio should turn positive, with upside exceeding downside, for the setup to become attractive again.
CounterThe point-in-time upside/downside snapshot is sensitive to analyst target revisions and could flip quickly if targets move higher.
Root's price sits below its 200-day moving average after a death cross, but MACD is improving and RSI has recovered to 61, indicating an attempted technical recovery.
→StableChart pattern detection
- Expectation
- Price should reclaim the 200-day moving average and complete a golden cross within 12 months.
CounterDeath crosses often precede extended downtrends, and an improving MACD off a depressed base is not proof the downtrend has reversed.
Per-dimension breakdown
Quality
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.1 |
| ROA | 2.2 |
| Gross margin | 3.9 |
| Op margin | 3.6 |
| Net margin | 1.9 |
| Current ratio | 6.9 |
| FCF quality | 10.0 |
| Moat | 5.8 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 215% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
4.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.9 |
| EPS growth | 5.1 |
Momentum
2.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 5.1 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -6.8%/30d — confirmed downtrend
Sentiment
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.8 |
| Analyst rating | 6.5 |
| Price target | 8.1 |
- ▸Light analyst coverage (5.0) — signal dampened
- ▸Analyst upside: 24%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Insider selling (low materiality) — $89,872 (0.011% of mkt cap)
- ▸Institutions accumulating
Peer rank
2.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.8 |
| quality rank | 2.7 |
| growth rank | 1.8 |
Technical
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.2 |
| support resistance | 6.2 |
| 52w position | 0.0 |
| gap | 7.0 |
Risk (lower is worse)
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 2.3 |
| days to cover | 2.7 |
| volatility | 0.0 |
| put call | 8.3 |
| implied vol | 1.6 |
| beta | 0.2 |
| debt equity | 8.2 |
| news risk | 6.0 |
- ▸High short interest: 15%
- ▸High IV: 70%
Catalyst
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 7.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:85d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:2.3<4.5
- ASYMMETRY:0.6<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
0.55
Upside
+8.3%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeInst Constrain — Small cap ($0.8B) below institutional reach
SuitabilitySpeculative — Drawdown -62% (>40% off 52w high), Binary industry: Insurance - Property & Casualty
Investment implication
The F-path SELL output reflects an overall score of 5.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 8.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.3<4.5, ASYMMETRY:0.6<1.5@spot, DEATH_CROSS:HARD_BLOCK) reinforce the read. Current asymmetry R:R is 0.55 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 8.0, Catalyst at 7.4, and Insider at 7.3; the weakest are Momentum at 2.3, Peer rank at 2.8, and Risk (lower is worse) at 3.7. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 0.55 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Attractive Valuation Vs Growth
Trip ifForward P/E rises above 30x without a corresponding acceleration in earnings growth.
- P2Consistent Earnings Beat Streak
Trip ifRoot reports an earnings surprise below 0% in the next reported quarter.
- P3Strong Cash Conversion Quality
Trip ifFCF-to-net-income conversion falls below 100% in a subsequent quarter.
- P4Negative Risk Adjusted Asymmetry
Trip ifThe risk-adjusted asymmetry ratio stays below 0 for 2 consecutive quarters.
- P5Technical Recovery From Downtrend
Trip ifPrice fails to close above the 200-day moving average within 2 quarters, or RSI falls below 40.