Shareholders of Ryan Specialty would probably like to forget the past six months even happened. The stock dropped 20.7% and now trades at $47.55. This may have investors wondering how to approach the situation.
Given the weaker price action, is now a good time to buy RYAN? Find out in our full research report, it’s free.
Why Is Ryan Specialty a Good Business?
Founded in 2010 by insurance industry veteran Patrick Ryan, Ryan Specialty (NYSE: RYAN) is a wholesale insurance broker and underwriting manager that helps retail brokers place complex or hard-to-place risks with insurance carriers.
1. Core Business Firing on All Cylinders
We can better understand Insurance Brokers companies by analyzing their organic revenue. This metric gives visibility into Ryan Specialty’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, Ryan Specialty’s organic revenue averaged 12.8% year-on-year growth. This performance was impressive and shows it can expand quickly without relying on expensive (and risky) acquisitions. 
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Ryan Specialty’s full-year EPS grew at an astounding 17.4% compounded annual growth rate over the last four years, better than the broader business services sector.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
Ryan Specialty has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the business services sector, averaging 18.9% over the last five years.
Final Judgment
These are just a few reasons why Ryan Specialty is one of the best business services companies out there. After the recent drawdown, the stock trades at 20.3× forward P/E (or $47.55 per share). Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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