- If you are wondering whether Kinsale Capital Group's current share price offers good value or carries extra risk, a useful starting point is to look closely at what the market is paying for the business today.
- The stock last closed at US$345.26, with returns of 1.1% over 7 days, a 7.2% decline over 30 days, a 12.0% decline year to date, and a 20.9% decline over 1 year, set against gains of 10.6% over 3 years and 107.4% over 5 years.
- Recent coverage has focused on Kinsale Capital Group as a specialist insurer, with attention on how market sentiment has shifted after a period of strong multi year returns and more recent share price weakness. Articles have also highlighted how investors are reassessing companies across the insurance sector, which provides context for Kinsale Capital Group's recent moves.
- Kinsale Capital Group currently scores a 2 out of 6 valuation check score. This raises the question of whether traditional tools like P/E multiples and discounted cash flow are telling the full story, or if there is a better way to judge value that will be covered at the end of this article.
Kinsale Capital Group scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Kinsale Capital Group Excess Returns Analysis
The Excess Returns model looks at how much profit a company is expected to earn above the return required by its shareholders, then converts those future excess profits into a per share value today.
For Kinsale Capital Group, the model starts with an estimated Book Value of $84.66 per share and a Stable EPS of $23.44 per share, based on weighted future Return on Equity estimates from 8 analysts. The Average Return on Equity used is 21.51%, compared with a Cost of Equity of $7.60 per share. This leads to an estimated Excess Return of $15.83 per share.
The Stable Book Value is set at $108.95 per share, using weighted future Book Value estimates from 7 analysts. Together, these inputs feed into the Excess Returns framework to estimate an intrinsic value per share of roughly $552.73.
Against the recent share price of $345.26, this Excess Returns valuation implies that Kinsale Capital Group is 37.5% undervalued on this model.
Result: UNDERVALUED
Our Excess Returns analysis suggests Kinsale Capital Group is undervalued by 37.5%. Track this in your watchlist or portfolio, or discover 61 more high quality undervalued stocks.
Approach 2: Kinsale Capital Group Price vs Earnings
For a profitable business like Kinsale Capital Group, the P/E ratio is a straightforward way to see what investors are paying today for each dollar of earnings. It ties the share price directly to the company’s current profitability, which many investors find easier to interpret than more complex cash flow models.
What counts as a “normal” P/E depends on how the market views a company’s growth prospects and risk profile. Higher expected growth or lower perceived risk can support a higher P/E, while lower growth or higher perceived risk tends to support a lower one.
Kinsale Capital Group currently trades on a P/E of 15.87x. That sits above the Insurance industry average of 11.40x and the peer group average of 8.07x. Simply Wall St’s proprietary “Fair Ratio” for Kinsale Capital Group is 11.35x. This Fair Ratio is designed to reflect the P/E that might be expected given factors such as earnings growth, industry, profit margins, market cap and company specific risks.
Compared with basic peer or industry comparisons, the Fair Ratio aims to be more tailored because it incorporates these company level characteristics rather than using broad averages alone. With the current P/E of 15.87x sitting above the Fair Ratio of 11.35x, the shares appear expensive on this metric.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Kinsale Capital Group Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St’s Community page let you attach a clear story about Kinsale Capital Group to hard numbers like your assumed fair value, revenue, earnings and margin forecasts. You can then compare that fair value to today’s price and see whether your story suggests buying, holding or selling. The narrative and valuation automatically update as new news or earnings arrive. A more optimistic investor might build a Narrative closer to the US$450 analyst target, while a more cautious investor might anchor around US$312, each linking their own view of competition, underwriting discipline and sector risks to a structured forecast and resulting fair value.
Do you think there's more to the story for Kinsale Capital Group? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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