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KINS Trades at a Premium to Industry: Will You Still Buy the Stock?
KINSKingstone(KINS) ZACKS·2025-05-20 17:46

Company Overview - Kingstone Companies (KINS) is the 12th largest homeowner insurer in New York with a market share of 2.1% in 2024 and a market capitalization of 232.3million[2]−KINSsharesaretradingataprice−to−bookvalueof3.48X,significantlyhigherthantheindustryaverageof1.58X,indicatingapremiumvaluation[1]FinancialPerformance−TheZacksConsensusEstimatefor2025earningsis232.3 million [2] - KINS shares are trading at a price-to-book value of 3.48X, significantly higher than the industry average of 1.58X, indicating a premium valuation [1] Financial Performance - The Zacks Consensus Estimate for 2025 earnings is 1.90, reflecting a 31% increase on revenues of 214million,whichis37.9214 million, which is 37.9% higher than previous figures [7] - KINS expects earnings per share in 2025 to range between 1.75 and 2.15[7]−Thecompanyhasseenasignificantimprovementinprofitability,withnetmarginincreasingby2,910basispointsoverthepasttwoyears,returningtoprofitabilityin2024afterthreeconsecutiveyearsoflosses[13]GrowthStrategy−Kingstoneispursuingafocusedgrowthstrategybyemphasizingitscorebusinessandexitingunderperformingsegments[11]−Thecompanyexpectsdirectwrittenpremiumsinitscorebusinesstogrowbetween152.15 [7] - The company has seen a significant improvement in profitability, with net margin increasing by 2,910 basis points over the past two years, returning to profitability in 2024 after three consecutive years of losses [13] Growth Strategy - Kingstone is pursuing a focused growth strategy by emphasizing its core business and exiting underperforming segments [11] - The company expects direct written premiums in its core business to grow between 15% and 25% in 2025 [12] - Kingstone's partnership with Earnix has enhanced its pricing sophistication, allowing it to implement pricing increases that align premiums with risk levels [11] Market Position and Outlook - The commercial insurance market in the Northeastern U.S. is projected to grow by 12.3% through 2025, positioning Kingstone to capitalize on market shifts due to competitors withdrawing from the personal property insurance segment [10] - Kingstone's return on equity (ROE) in the trailing 12 months was 35.7%, significantly higher than the industry average of 7.8%, with expectations of ROE between 27% and 35% in 2025 [14] - The return on invested capital (ROIC) was 29.4%, also above the industry average of 5.9%, indicating efficient fund utilization [15] Investment Potential - Kingstone's focus on strengthening its niche market position, improving pricing and combined ratio, and delivering strong earnings suggests positive growth potential [16] - The average target price for KINS is 14, indicating a 12.6% upside potential from its last closing price [16] - Despite its high valuation, KINS is rated as a Zacks Rank 1 stock, suggesting it is a worthy addition to investment portfolios [17]