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TWFG, Inc. Class A (TWFG)
NASDAQ:TWFG
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TWFG, Inc. Class A
(NASDAQ:TWFG)
64Neutral
Positive Factors
Business Expansion
TWFG reported robust headcount growth throughout 2024, including +19% quarter-over-quarter growth in offices in 3Q24.
Earnings
TWFG preannounced stronger-than-expected 4Q24 top-line results, including upside from written premiums, organic commissions, and profit commissions.
Negative Factors
Macro Environment
Given the uncertain macro environment, there are more attractive risk-reward profiles elsewhere, leading to a reiteration of an equal weight recommendation on the stock.
TWFG, Inc. Class A (TWFG) vs. S&P 500 (SPY)
Market Cap
$1.24B
Dividend YieldN/A
Average Volume (3M)66.29K
Price to Earnings (P/E)22.4
Beta (1Y)0.30
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees264
SectorFinancial
Sector Strength77
IndustryInsurance
Share Statistics
EPS (TTM)1.34
Shares Outstanding14,811,874
10 Day Avg. Volume58,265
30 Day Avg. Volume66,288
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)16.32
Price to Cash Flow (P/CF)35.10
P/FCF Ratio34.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$34.00Price Target Upside13.03% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
TWFG, Inc. Class A Business Overview & Revenue Model
Company DescriptionTWFG, Inc. Class A (TWFG) is a company operating in the insurance sector, offering a wide range of insurance products, including personal, commercial, and life insurance policies. The company focuses on providing tailored insurance solutions to meet the diverse needs of its clients, leveraging a network of agents and brokers to deliver its services across various regions.
How the Company Makes MoneyTWFG, Inc. generates revenue primarily through the sale of insurance policies. The company earns premiums from policyholders, which form the core of its revenue stream. Additionally, TWFG may also gain income from investment activities, as insurance companies often invest the premiums they collect to generate returns. The company might have partnerships with various underwriters and reinsurers to manage risk and enhance its service offerings, though specific details on these partnerships are unavailable.
TWFG, Inc. Class A Financial Statement Overview
Summary
TWFG shows strong revenue growth but struggles with profitability as net income declines. The company faces increased leverage, raising financial risk, yet it maintains strong cash flow generation, which aids liquidity.Income Statement
TWFG's revenue increased by 13% year-over-year, indicating a positive growth trajectory. However, the net profit margin decreased significantly due to a sharp drop in net income, impacting overall profitability. The company maintains solid gross and EBIT margins, showcasing operational efficiency.60
Neutral
Balance Sheet
The company has increased its leverage, as indicated by a higher debt-to-equity ratio, which raises financial risk. The equity ratio has decreased, reflecting a reduction in shareholder equity relative to total assets. Despite these concerns, the company remains solvent with a positive equity balance.55
Neutral
Cash Flow
TWFG has shown a positive growth in free cash flow, supported by strong operating cash flow. The operating cash flow to net income ratio highlights the company’s ability to convert income into cash effectively, which is a positive indicator for liquidity and operational efficiency.70
Positive
| Breakdown | ||
| TTM | Dec 2023 | Dec 2022 |
|---|---|---|
| Income Statement | Total Revenue | |
| 185.45M | 166.99M | 147.78M | Gross Profit |
| 39.51M | 31.51M | 30.23M | EBIT |
| 24.00M | 21.61M | 23.76M | EBITDA |
| 33.51M | 26.46M | 27.05M | Net Income Common Stockholders |
| 3.69M | 4.13M | 20.61M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |
| 39.30M | 39.30M | 22.33M | Total Assets |
| 115.44M | 115.44M | 114.15M | Total Debt |
| 51.76M | 51.76M | 13.31M | Net Debt |
| 12.46M | 12.46M | -9.02M | Total Liabilities |
| 84.39M | 84.39M | 56.37M | Stockholders Equity |
| 31.05M | 31.05M | 57.79M |
| Cash Flow | Free Cash Flow | |
| 4.53M | 14.51M | 13.48M | Operating Cash Flow |
| 34.93M | 30.15M | 25.75M | Investing Cash Flow |
| -30.30M | -14.65M | -14.50M | Financing Cash Flow |
| 154.84M | -9.70M | -15.26M |
TWFG, Inc. Class A Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $82.97B | 49.51 | 9.46% | 0.74% | 15.21% | 46.99% | |
77 Outperform | $33.73B | 34.63 | 16.35% | 0.47% | 12.89% | 13.50% | |
76 Outperform | $116.02B | 28.77 | 31.80% | 1.33% | 7.60% | 8.66% | |
75 Outperform | $20.99B | 39.21 | 32.89% | 1.15% | 16.38% | 34.58% | |
73 Outperform | $86.34B | 31.95 | 100.25% | 0.68% | 17.51% | 1.31% | |
64 Neutral | $1.24B | 22.37 | 13.31% | ― | ― | ― | |
64 Neutral | $13.80B | 10.64 | 9.23% | 4.22% | 17.66% | -7.66% |
* Financial Sector Average
Performance Comparison
TWFG
TWFG, Inc. Class A
30.08
7.47
33.04%
AON
Aon
399.74
82.05
25.83%
AJG
Arthur J Gallagher & Co
325.75
72.48
28.62%
BRO
Brown & Brown
117.96
32.94
38.74%
ERIE
Erie Indemnity Company
443.55
40.73
10.11%
MMC
Marsh & Mclennan Companies
233.11
28.24
13.78%
TWFG, Inc. Class A Earnings Call Summary
Earnings Call Date: Feb 28, 2025 | % Change Since: -0.53% | Next Earnings Date: Sep 2, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mixed outlook with significant achievements in IPO completion, revenue growth, and geographical expansion, balanced by challenges from natural disasters and increased operational expenses. Despite a decrease in net income, the company showed resilience and strategic foresight.Highlights
Successful IPO Launch
TWFG completed its IPO in July, raising $192.9 million in net proceeds through the issuance of 12,650,000 shares of Class A common stock at $17 per share.
Geographical Expansion and Recruitment
TWFG launched 86 new locations in Q3, expanding into 13 new states, which includes Alabama, Connecticut, Idaho, Indiana, Missouri, Nevada, New Mexico, Oregon, South Carolina, South Dakota, Tennessee, Washington, and Wyoming.
Revenue and Income Growth
TWFG reported a 14.5% total revenue growth, 7.6% organic revenue growth, a 15.3% adjusted net income margin, and a 21.5% adjusted EBITDA margin for the quarter.
Increased Written Premiums
Written premiums increased by $46 million or 13% to $400.1 million, driven by new business acceleration and normalized retention levels.
Lowlights
Impact of Natural Disasters
TWFG faced operational disruptions due to Hurricanes Beryl, Francine, Helene, and Milton impacting various locations, though they managed to maintain business continuity.
Decrease in Net Income
Net income for the quarter decreased by $0.7 million or 9.4% over the prior year period to $6.9 million.
Increased Expenses
Total salary and benefits expense increased by $4.9 million or 146% over the prior year period to $8.3 million, largely due to branch conversions and public company costs.
Company Guidance
During the TWFG Q3 2024 earnings call, the company provided detailed financial guidance showcasing robust growth and strategic resilience. TWFG reported a 14.5% increase in total revenue, reaching $54.6 million, and a 7.6% organic revenue growth. The company's adjusted net income margin was 15.3%, while the adjusted EBITDA margin stood at 21.5%. Written premium increased by $46 million, totaling $400.1 million, driven by an increase in new business premiums by 39% and a normalization in premium retention to 88%. The firm also highlighted successful recruiting efforts with 86 new agency locations opened, expanding into 13 new states. Despite the challenges posed by multiple hurricanes, TWFG successfully completed its IPO, raising $192.9 million, further strengthening its conservative balance sheet and positioning the company for continued growth and acquisition opportunities.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.