Skyward Specialty Insurance’s 25.4% return over the past six months has outpaced the S&P 500 by 17.2%, and its stock price has climbed to $58.31 per share. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Following the strength, is SKWD a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Is Skyward Specialty Insurance a Good Business?
Founded in 2006 to serve markets where standard insurance coverage falls short, Skyward Specialty Insurance (NASDAQ: SKWD) provides customized commercial property, casualty, and health insurance solutions for underserved or specialized market niches.
1. Net Premiums Earned Skyrocket, Fueling Growth Opportunities
Net premiums earned are net of what’s paid to reinsurers (insurance for insurance companies), which are used by insurers to protect themselves from large losses.
Skyward Specialty Insurance’s net premiums earned has grown at a 27.6% annualized rate over the last two years, much better than the broader insurance industry and in line with its total revenue.
2. Projected Revenue Growth Is Remarkable
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.
Over the next 12 months, sell-side analysts expect Skyward Specialty Insurance’s revenue to rise by 25.2%. While this projection is slightly below its 27.6% annualized growth rate for the past two years, it is eye-popping and indicates the market is forecasting success for its products and services.
3. Growing BVPS Reflects Strong Asset Base
In the insurance industry, book value per share (BVPS) provides a clear picture of shareholder value, as it represents the total equity backing a company’s insurance operations and growth initiatives.
Although Skyward Specialty Insurance’s BVPS increased by a meager 1.5% annually over the last four years, the good news is that its growth has recently accelerated as BVPS grew at an incredible 26% annual clip over the past two years (from $17.31 to $27.50 per share).
Final Judgment
These are just a few reasons Skyward Specialty Insurance is a high-quality business worth owning, and with its shares beating the market recently, the stock trades at 2× forward P/B (or $58.31 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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