Ryan Specialty: Insurance Company Readies For Its Next Move
Ryan Specialty Holdings (RYAN) continues to trade sideways in a flat base as investors await the next catalyst to lift the stock. The insurance company is expected to post robust profit growth for its current third quarter when it reports results around Halloween.
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The IBD Big Cap 20 stock is a wholesale broker and managing underwriter. It provides actuarial, underwriting and risk management services to insurance companies — including brokers, agents and carriers. It offers property, casualty, workers’ compensation and transportation insurance, along with personal lines of coverage.
Ryan Specialty ranks No. 1 out of 16 in Investor’s Business Daily’s Insurance-Brokers group. The group moved up to No. 28 from the No. 45 spot a week ago out of 197 IBD industry groups. Insurance stocks have outperformed lately as the group holds a Relative Strength Rating of A from IBD.
On Sept. 16, Ryan Specialty announced it completed the acquisition of the property and casualty managing general underwriters, owned by Ethos Specialty Insurance, from Ascot Group Limited for an undisclosed amount.
Ryan Specialty Stock Prepares For Next Move
The insurance company beat second-quarter adjusted earnings and sales expectations when it reported results on Aug. 1. Ryan Specialty also raised its full-year 2024 revenue growth outlook to a range of 13% to 14%.
The positive report sent shares up 9.7% in heavy volume the following day, boosting Ryan Specialty to a record high. Shares gave back a good portion of the gain the following day and began forming a flat base with a 69.03 buy point, according to MarketSurge pattern recognition.
The insurance stock has been biding time in tight trades in the lower half of the base. Volume has dried up as the stock tests its 10-week moving average. The stock is in its fourth base since it woke up about a year ago.
The stock’s relative strength line has taken a sharp turn downward as a result of its recent slide and should be monitored. Despite the latest pullback, Ryan Specialty stock has gained around 45% so far this year.
Profit Outlook Is Bright
Ryan Specialty’s second-quarter adjusted earnings grew 29%. That followed increases of 30% and 35% in the prior two quarters. Profits are projected to rise 30% in the current quarter followed by 31% and 28% in the following two periods. The stock’s green earnings line, as shown on the weekly MarketSurge chart, has been on a steep incline since May 2023.
The company’s second-quarter revenue growth of 19% was in line with its 20% average over the last five quarters. FactSet estimates show sales rising between 19% and 22% over the next four quarters. Full-year projections call for 29% profit growth in 2024 and 22% in 2025.
Solid fundamentals earned Ryan Specialty a best-possible 99 IBD Composite Rating and a 98 Earnings Per Share Rating.
Its Accumulation/Distribution Rating of A- indicates fairly heavy institutional buying over the last 13 weeks. In addition, its Up/Down Volume Ratio of 1.5 shows positive demand for the stock over the last 50 days.
Management owns 14% of shares showing leadership conviction in the stock. Mutual funds have rediscovered the stock, with 420 owning shares in June, up from 372 in March.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
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