Kinsale Capital Group, Inc. (KNSL – Free Report) has been trading above its 50-day simple moving average (SMA), signaling a short-term bullish trend. Its share price, as of March 27, 2025, was $486.75, down 8.4% from its 52-week high of $531.79.
The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend.
With a market capitalization of $11.33 billion, the average volume of shares traded in the last three months was 0.1 million. KNSL has a solid earnings surprise history. It beat estimates in each of the last four quarters, the average being 7.90%.
KNSL Price Movement vs. 50-Day Moving Average
Image Source: Zacks Investment Research
Price Performance
Shares of KNSL have gained 4.6% year to date, outperforming the Finance sector and the S&P 500 composite’s growth of 3.8% and 3.3%, respectively. It, however, underperformed the industry’s growth of 13.9%.
KNSL YTD Price Performance
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 7.8%. The consensus estimate for revenues is pegged at $1.80 billion, implying a year-over-year improvement of 13.2%.
The consensus estimate for 2026 earnings per share and revenues indicates an increase of 19.6% and 14.3%, respectively, from the corresponding 2025 estimates.
Earnings have grown 44.3% in the past five years, better than the industry average of 19.3%. The expected long-term earnings growth rate is 15%, outperforming the industry average of 8%.
Expensive Valuation
The insurer’s shares are trading at a price-to-earnings multiple of 7.64, higher than the industry average of 1.64. KNSL is also expensive compared with The Travelers Companies, Inc. (TRV – Free Report) , Cincinnati Financial Corporation (CINF – Free Report) and RLI Corp. (RLI – Free Report) .
Factors Favoring 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-poised 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 are 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-poised 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.
KNSL’s Favorable Return on Capital
Kinsale Capital’s return on equity (ROE) of 28% for the trailing 12 months compared favorably with the industry’s 8.3%, 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 24.1% for the trailing 12 months compared favorably with the industry’s 6.3%.
Wrapping Up: Keep On Holding
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.
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.
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