Goosehead Insurance (GSHD) Valuation Check After Sharp One Year Share Price Decline

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Goosehead Insurance (GSHD) has drawn attention after a series of weak recent returns, including an almost 58% decline over the past year, prompting investors to reassess the business and its financial profile.

The company reports annual revenue of US$353.231 million and net income of US$30.255 million. This points to a business model that is currently profitable while still being relatively small compared with larger insurance broker peers.

Goosehead Insurance operates as a holding company for Goosehead Financial. It focuses on personal lines insurance agency services such as homeowners, auto, flood, wind, earthquake and liability policies, distributed through a mix of corporate and franchise locations.

Over the past month and past 3 months, the stock has recorded declines of 32% and 29% respectively. Year to date performance has also been weaker, which may lead some investors to look more closely at business fundamentals rather than recent price action alone.

See our latest analysis for Goosehead Insurance.

At a share price of US$48.69, Goosehead Insurance has seen sharp near term weakness, with a 1 month share price return of 32% decline and a 1 year total shareholder return of 57.73% decline, even though the 3 year total shareholder return remains positive.

If this kind of volatility has you looking around the market, it could be a good moment to broaden your search with our screener of 23 top founder-led companies and see what else fits your criteria.

With revenue of US$353.231 million, net income of US$30.255 million and a share price of US$48.69 that sits below some valuation estimates, is Goosehead Insurance now a potential opportunity, or is the market already pricing in future growth?

The most followed narrative puts Goosehead Insurance’s fair value at $91.55 per share, compared with the last close of $48.69. This sets up a wide gap investors will want to understand.

Rapid adoption of Goosehead’s proprietary AI and digital platforms is driving lower servicing costs and improved client experience, positioning the company to benefit from rising consumer demand for seamless, tech-enabled insurance solutions. This is expected to expand operating leverage and boost net margins over time.

Read the complete narrative.

Want to see what sits behind that earnings power story? The narrative leans on faster revenue growth, rising margins and a rich future earnings multiple. Curious how those ingredients add up to that fair value gap and why the market price is still well below it?

Result: Fair Value of $91.55 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, there are still real watchpoints here, including execution risk around heavy technology and investment spending, as well as exposure to climate-driven catastrophe trends affecting carrier appetite.

Find out about the key risks to this Goosehead Insurance narrative.

The first narrative leans heavily on future earnings power, but today the stock trades on a P/E of 40.1x. That is far above the US Insurance industry at 12.3x, peers at 22.6x, and even the fair ratio of 20.5x that our model suggests the market could move toward.

Put simply, you have a company flagged as trading 34.1% below one fair value estimate. Yet the current earnings multiple is roughly double that fair ratio and well ahead of sector norms. Is this a rare case where the growth story justifies the premium, or is it valuation risk in disguise?

See what the numbers say about this price — find out in our valuation breakdown.

If you are not fully on board with this view or prefer to lean on your own research and data, you can build a custom Goosehead story in just a few minutes, starting with Do it your way.

A great starting point for your Goosehead Insurance research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

If Goosehead has sparked questions about where else your money could work, now is the time to line up a few more ideas before the market moves on without you.

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.

Companies discussed in this article include GSHD.

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