Have you been paying attention to shares of Root, Inc. (ROOT)? Shares have been on the move with the stock up 56.7% over the past month. The stock hit a new 52-week high of $141.23 in the previous session. Root, Inc. has gained 90.6% since the start of the year compared to the 5.6% move for the Zacks Finance sector and the 5% return for the Zacks Insurance - Property and Casualty industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 30, 2024, Root reported EPS of $1.35 versus consensus estimate of $-0.61.

For the current fiscal year, Root is expected to post earnings of -$0.81 per share on $1.13 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $0.50 per share on $1.14 billion in revenues. This represents a year-over-year change of -912.5% and 1.06%, respectively.

Valuation Metrics

Root may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Root has a Value Score of D. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Root currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Root fits the bill. Thus, it seems as though Root shares could still be poised for more gains ahead.

How Does ROOT Stack Up to the Competition?

Shares of ROOT have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is The Progressive Corporation (PGR). PGR has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of C.

Earnings were strong last quarter. The Progressive Corporation beat our consensus estimate by 18.95%, and for the current fiscal year, PGR is expected to post earnings of $14.44 per share on revenue of $87.39 billion.

Shares of The Progressive Corporation have gained 6.8% over the past month, and currently trade at a forward P/E of 18.15X and a P/CF of 38.68X.

The Insurance - Property and Casualty industry is in the top 35% of all the industries we have in our universe, so it looks like there are some nice tailwinds for ROOT and PGR, even beyond their own solid fundamental situation.

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