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Bowhead Specialty Holdings Inc. (BOW)
NYSE:BOW
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Bowhead Specialty Holdings Inc.
(NYSE:BOW)
78Outperform
Positive Factors
Financial Performance
Bowhead Specialty Holdings reported operating EPS of $0.42, beating our $0.35 estimate and consensus of $0.33.
Growth Prospects
The analyst raises the rating to Outperform from Market Perform due to strong growth prospects.
Negative Factors
Market Performance
BOW's shares have underperformed its specialty P&C peers, the KBW Insurance Index, and the S&P 500.
Bowhead Specialty Holdings Inc. (BOW) vs. S&P 500 (SPY)
Market Cap
$1.11B
Dividend YieldN/A
Average Volume (3M)146.46K
Price to Earnings (P/E)29.0
Beta (1Y)0.41
Revenue Growth50.21%
EPS Growth37.28%
CountryUS
Employees216
SectorGeneral
Sector StrengthN/A
IndustryInsurance
Share Statistics
EPS (TTM)1.19
Shares Outstanding32,662,680
10 Day Avg. Volume231,138
30 Day Avg. Volume146,464
Financial Highlights & Ratios
PEG Ratio0.78
Price to Book (P/B)N/A
Price to Sales (P/S)4.34
Price to Cash Flow (P/CF)2.30
P/FCF Ratio2.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$38.75Price Target Upside12.16% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Bowhead Specialty Holdings Inc. Business Overview & Revenue Model
Company DescriptionBowhead Specialty Holdings Inc. (BOW) operates in the specialty insurance sector, offering a range of innovative insurance products and tailored risk management solutions. The company focuses on providing specialized coverage options for sectors that require unique and complex insurance needs, leveraging its expertise to address the distinct challenges faced by its clients.
How the Company Makes MoneyBowhead Specialty Holdings Inc. generates revenue primarily through underwriting specialty insurance policies and collecting premiums from its clients. The company offers a variety of specialized insurance products, catering to niche markets that are underserved by traditional insurance providers. By focusing on these specialized areas, Bowhead can charge higher premiums due to the bespoke nature of the coverage. Additionally, the company may invest collected premiums in a diversified portfolio to generate investment income, thereby enhancing its overall earnings. Strategic partnerships with reinsurers and brokers also play a role in expanding its market reach and optimizing its risk management practices.
Bowhead Specialty Holdings Inc. Financial Statement Overview
Summary
Bowhead Specialty Holdings Inc. exhibits strong financial performance with significant revenue and profit growth across income statement, balance sheet, and cash flow metrics. The company benefits from effective cost management and cash generation capabilities, with no debt enhancing financial stability. However, a relatively low equity ratio suggests a potential risk if external financing is needed.Income Statement
Bowhead Specialty Holdings Inc. demonstrates a robust financial performance with a consistent increase in total revenue, achieving a significant growth rate of 50.2% from 2023 to 2024. The gross profit margin remains strong at 100% due to revenue equating to gross profit, indicating effective cost management. Net profit margin improved from 8.8% in 2023 to 9.0% in 2024, driven by an increase in net income. EBIT margin also improved remarkably from 12.1% in 2023 to 79.0% in 2024, showcasing enhanced operational efficiency. However, the absence of EBITDA data for 2024 limits a full assessment of operational cash efficiency.88
Very Positive
Balance Sheet
The balance sheet of Bowhead Specialty Holdings Inc. indicates a stable financial position with no debt, resulting in a favorable debt-to-equity ratio of 0. The company's equity ratio improved to 22.4% in 2024, reflecting a solid equity base relative to total assets. The return on equity (ROE) increased to 10.3% in 2024, highlighting effective utilization of shareholder equity to generate profit. However, the relatively low equity ratio suggests a potential risk in leveraging further growth through equity.75
Positive
Cash Flow
The cash flow statement shows strong cash generation capabilities with a 25.3% growth in free cash flow from 2023 to 2024, indicating effective capital management. The operating cash flow to net income ratio stands at a healthy 7.7, suggesting efficient conversion of income into cash. Additionally, a substantial free cash flow to net income ratio of 7.6 demonstrates strong cash profitability. Continued positive cash flow growth supports business operations and future investments.80
Positive
| Breakdown | |||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 |
|---|---|---|---|
| Income Statement | Total Revenue | ||
| 141.86M | 425.66M | 283.27M | 187.59M | Gross Profit |
| 141.86M | 425.66M | 283.27M | 187.59M | EBIT |
| 12.95M | 336.55M | 34.38M | 14.66M | EBITDA |
| 96.08M | 0.00 | 34.41M | 15.36M | Net Income Common Stockholders |
| 9.78M | 38.24M | 25.05M | 11.26M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||
| 987.46M | 1.10B | 118.07M | 347.58M | Total Assets |
| 1.65B | 1.65B | 1.03B | 430.14M | Total Debt |
| 0.00 | 0.00 | 0.00 | 0.00 | Net Debt |
| -97.48M | -222.06M | -118.07M | -80.65M | Total Liabilities |
| 1.28B | 1.28B | 835.78M | 346.77M | Stockholders Equity |
| 370.44M | 370.18M | 192.08M | 83.37M |
| Cash Flow | Free Cash Flow | ||
| 94.75M | 291.18M | 232.41M | 177.67M | Operating Cash Flow |
| 96.70M | 294.29M | 236.22M | 181.64M | Investing Cash Flow |
| -180.61M | -325.88M | -274.76M | -187.46M | Financing Cash Flow |
| 42.59M | 133.89M | 77.66M | -1.00M |
Bowhead Specialty Holdings Inc. Technical Analysis
Positive
34.55
Price Trends
32.93
Positive
33.27
Positive
30.43
Positive
Market Momentum
0.38
Negative
58.34
Neutral
69.99
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BOW, the sentiment is Positive. The current price of 34.55 is above the 20-day moving average (MA) of 33.12, above the 50-day MA of 32.93, and above the 200-day MA of 30.43, indicating a bullish trend. The MACD of 0.38 indicates Negative momentum. The RSI at 58.34 is Neutral, neither overbought nor oversold. The STOCH value of 69.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for BOW.
Bowhead Specialty Holdings Inc. Risk Analysis
Bowhead Specialty Holdings Inc. disclosed 57 risk factors in its most recent earnings report. Bowhead Specialty Holdings Inc. reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Bowhead Specialty Holdings Inc. Peers Comparison
Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $33.47B | 8.08 | 22.02% | ― | 26.24% | -3.87% | |
78 Outperform | $1.11B | 29.02 | 13.60% | ― | 50.21% | 37.28% | |
77 Outperform | $23.50B | 14.23 | 22.16% | 0.51% | 12.32% | 29.21% | |
73 Outperform | $23.33B | 9.12 | 16.52% | ― | 5.17% | 35.36% | |
73 Outperform | $11.57B | 6.67 | 18.40% | 0.66% | 28.22% | -31.48% | |
71 Outperform | $6.79B | 19.78 | 23.56% | 0.79% | 18.31% | 13.13% | |
54 Neutral | $4.65B | -15.03 | -11.66% | 5.00% | 31.72% | -51.64% |
* General Sector Average
Performance Comparison
BOW
Bowhead Specialty Holdings Inc.
34.46
8.76
34.09%
ACGL
Arch Capital Group
90.41
3.04
3.48%
MKL
Markel
1,819.38
296.34
19.46%
RNR
Renaissancere Holdings
236.23
-0.04
-0.02%
RLI
RLI
74.40
3.11
4.36%
WRB
W. R. Berkley Corporation
61.87
6.23
11.20%
Bowhead Specialty Holdings Inc. Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: 9.82% | Next Earnings Date: Aug 12, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong premium growth across divisions, particularly in the Casualty division. The company successfully launched new initiatives such as Baleen and environmental liability products. Despite an increased loss ratio and competitive pressures in the professional liability market, the company demonstrated strong investment income growth and an increase in shareholder value.Highlights
Strong Premium Growth
Gross written premiums grew by $48 million or 32% to $197 million compared to a year ago, with standout performance in the Casualty division which grew 42%.
Casualty Division Performance
The Casualty division's premiums grew 42% to over $120 million, driven by favorable underwriting and pricing conditions in the excess casualty book.
Healthcare and Professional Liability Growth
Healthcare Liability division grew 29% to $31 million, while Professional Liability increased 13% to $45 million, driven by the cyber liability portfolio.
New Growth Initiatives
Baleen, a new low-touch flow underwriting division, expanded its offerings significantly, and a new environmental liability product line was launched.
Investment Income Growth
Pretax net investment income more than doubled to $11.5 million, driven by the increase in investment portfolio and higher investment yields.
Increase in Shareholder Value
Total equity was $365 million, with a diluted book value per share of $10.97, an increase of 37% from year-end.
Lowlights
Increased Loss Ratio
The loss ratio for the quarter was 64.5%, which increased 4.1 points from the previous year, driven by updated loss ratios since Q4 2023.
Competitive Professional Liability Market
The professional liability market, excluding cyber, remains competitive with undisciplined behaviors and increased capacity from legacy markets.
Company Guidance
During Bowhead Specialty Holdings' Q3 2024 earnings call, several key metrics were highlighted reflecting the company's growth and financial performance. The gross written premiums increased by 32% to $197 million, with a notable 42% growth in the Casualty division, reaching over $120 million. The Healthcare Liability division grew by 29% to $31 million, while the Professional Liability division saw a 13% increase to $45 million, largely driven by the cyber liability portfolio. The company's adjusted net income was reported at $12.5 million, or $0.38 per diluted share, with an adjusted return on average equity of 14.2%. The loss ratio for the quarter was 64.5%, and the expense ratio stood at 29.9%, contributing to a combined ratio of 94.4%. Bowhead's investment portfolio yielded a pretax net investment income of $11.5 million, with a book yield and new money rate of 4.7%. The effective tax rate was 23.6%, and total equity amounted to $365 million, leading to a diluted book value per share of $10.97, marking a 37% increase from year-end.Bowhead Specialty Holdings Inc. Corporate Events
Business Operations and StrategyFinancial Disclosures
Bowhead Specialty Highlights Profitable Growth in E&S Market
Positive
Feb 28, 2025
On February 28, 2025, Bowhead Specialty Holdings Inc. released an investor presentation for the period ending December 31, 2024. The presentation highlights the company’s focus on profitable growth in the E&S market, emphasizing its strong underwriting culture and experienced management team. The company reported a combined ratio for 2024, reflecting changes in its portfolio mix, particularly in casualty lines. This strategic focus positions Bowhead for continued growth and strong returns, benefiting stakeholders and reinforcing its market position.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.