Skyward Specialty Insurance Group, Inc. (SKWD) AI Stock Analysis

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Skyward Specialty Insurance Group, Inc.

(NASDAQ:SKWD)

Rating:79Outperform

Price Target:―

Skyward Specialty Insurance Group, Inc. shows robust financial performance, with growth in revenue, net income, and cash flow, supported by strategic management and a strong market position. The technical analysis indicates strong momentum, though caution is advised due to overbought conditions. Valuation is moderate, reflecting growth prospects. Overall, the company's strategic initiatives and solid financial health position it well for future growth, earning a solid stock score.

Positive Factors

Earnings

Skyward should continue to outperform earnings expectations given the favorable outlook for both top-line growth and margin performance.

Premium Growth

Premium growth should continue to benefit from increased demand for specialty and E&S coverage.

Technology and Efficiency

By leveraging technology across all aspects of its business, Skyward is able to enhance risk selection and better manage claims, thereby boosting efficiency and returns.

Negative Factors

Growth and Loss Ratios

The combination of decelerating growth and increasing loss ratios is expected to lead returns to settle in a lower range.

Risk-Reward Outlook

The risk-reward outlook is largely in balance, leading to a downgrade from Outperform to Peer Perform.

Valuation

Valuation appears full given growth outlook, making it difficult to support further multiple expansion.

Skyward Specialty Insurance Group, Inc. (SKWD) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$2.46B

Dividend YieldN/A

Average Volume (3M)379.09K

Price to Earnings (P/E)20.4

Beta (1Y)0.41

Revenue Growth25.88%

EPS Growth9.45%

CountryUS

Employees580

SectorFinancial

Sector Strength82

IndustryInsurance - Property & Casualty

Share Statistics

EPS (TTM)0.90

Shares Outstanding40,402,878

10 Day Avg. Volume355,433

30 Day Avg. Volume379,086

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)2.91

Price to Sales (P/S)0.00

P/FCF Ratio8.02

Enterprise Value/Market Cap0.97

Enterprise Value/Revenue0.57

Enterprise Value/Gross Profit2.09

Enterprise Value/Ebitda3.43

Forecast

1Y Price Target

$58.67

Price Target Upside-3.77% Downside

Rating ConsensusModerate Buy

Number of Analyst Covering9

Skyward Specialty Insurance Group, Inc. Business Overview & Revenue Model

Company DescriptionSkyward Specialty Insurance Group, Inc., an insurance holding company, engages in underwriting commercial property and casualty insurance coverages in the United States. The company offers general liability, excess liability, professional liability, commercial auto, group accident and health, property, surety, and workers' compensation insurance products. Skyward Specialty Insurance Group, Inc. was incorporated in 2006 and is headquartered in Houston, Texas.

How the Company Makes MoneySkyward Specialty Insurance Group, Inc. generates revenue primarily through the underwriting of specialty insurance policies. The company earns money by collecting premiums from policyholders in exchange for coverage against specified risks. These premiums serve as the primary revenue stream for the company. Skyward also invests a portion of the premiums collected in various financial instruments to generate investment income, which contributes to overall earnings. Additionally, the company may form strategic partnerships with other insurance providers or reinsurers to expand its product offerings and manage risk effectively, further influencing its revenue generation.

Skyward Specialty Insurance Group, Inc. Financial Statement Overview

Summary

Skyward Specialty Insurance Group, Inc. demonstrates strong financial health with significant revenue and profit growth, efficient equity utilization, and robust cash flow generation. While operational efficiency has shown volatility, the company's conservative leverage and strong cash position provide a cushion against potential risks, positioning it well in the insurance industry.

Income Statement

Very Positive

Skyward Specialty Insurance Group, Inc. has demonstrated strong revenue growth, with a TTM (Trailing-Twelve-Months) revenue increase of 28.5% compared to the previous year. The gross profit margin remains robust at 100% due to the nature of the insurance industry. Net profit margin improved to 10.3%, showcasing enhanced profitability. However, the lack of EBIT in the previous year indicates potential volatility in operational efficiency.

Balance Sheet

Positive

The company maintains a healthy balance sheet with a low debt-to-equity ratio of 0.15, indicating conservative leverage. The return on equity has improved to 14.96%, reflecting efficient use of shareholders' equity. However, the equity ratio stands at 21.29%, suggesting a moderate reliance on liabilities to finance assets.

Cash Flow

Very Positive

Skyward shows a solid cash flow position with a high free cash flow to net income ratio of 2.53, indicating strong cash generation relative to accounting profits. However, the operating cash flow to net income ratio of 2.57 suggests the need for careful management of operating activities to sustain cash flow.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.15B	895.40M	642.42M	535.82M	447.89M
	Gross Profit
1.15B	895.40M	642.42M	535.82M	447.89M
	EBIT
152.74M	110.10M	56.19M	48.75M	-94.66M
	EBITDA
165.59M	124.02M	61.32M	58.05M	-84.01M
	Net Income Common Stockholders
118.83M	85.98M	39.40M	38.32M	-74.64M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.18B	863.92M	774.17M	206.38M	299.41M
	Total Assets
3.73B	2.95B	2.37B	2.12B	1.95B
	Total Debt
119.54M	128.69M	128.61M	128.53M	128.45M
	Net Debt
-2.07M	62.80M	83.17M	86.42M	64.99M
	Total Liabilities
2.94B	2.29B	1.95B	1.69B	1.65B
	Stockholders Equity
794.00M	661.03M	421.66M	426.08M	303.22M
Cash Flow		Free Cash Flow
300.89M	335.03M	206.61M	173.13M	42.64M
	Operating Cash Flow
305.12M	338.19M	208.94M	175.28M	44.71M
	Investing Cash Flow
-243.69M	-493.81M	-193.38M	-183.01M	-74.93M
	Financing Cash Flow
-4.23M	130.95M	2.18M	1.38M	56.30M

Skyward Specialty Insurance Group, Inc. Technical Analysis

Technical Analysis Sentiment

Positive

Last Price60.97

Price Trends

50DMA

55.04

Positive

100DMA

51.27

Positive

200DMA

48.15

Positive

Market Momentum

MACD

2.19

Positive

RSI

60.13

Neutral

STOCH

50.62

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SKWD, the sentiment is Positive. The current price of 60.97 is above the 20-day moving average (MA) of 59.23, above the 50-day MA of 55.04, and above the 200-day MA of 48.15, indicating a bullish trend. The MACD of 2.19 indicates Positive momentum. The RSI at 60.13 is Neutral, neither overbought nor oversold. The STOCH value of 50.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SKWD.

Skyward Specialty Insurance Group, Inc. Risk Analysis

Skyward Specialty Insurance Group, Inc. disclosed 40 risk factors in its most recent earnings report. Skyward Specialty Insurance Group, 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 3 New Risks

We have identified a material weakness in our internal control over information technology general controls ("ITGCs"). If we fail to remediate the material weakness, or if we fail to establish and maintain effective internal control over ITGCs, the market price of our common stock could be adversely affected. Q4, 2024

We have experienced rapid growth in recent years, and our recent growth rates may not be indicative of our future growth. Q4, 2024

Changes to the U.S. tax laws and implementation of new tax policies could have a significant negative impact on the overall economy and our business. Q4, 2024

Skyward Specialty Insurance Group, Inc. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SKWD	79 Outperform	$2.46B	20.37	16.03%	―	25.88%	9.45%
ROOT	73 Outperform	$2.09B	43.09	17.95%	―	98.66%	―
BOW	70 Outperform	$1.21B	28.25	14.40%	―	50.21%	37.28%
SAFT	69 Neutral	$1.22B	16.69	8.75%	4.41%	19.05%	40.69%
HCI	67 Neutral	$1.91B	15.98	28.75%	0.97%	20.89%	3.25%
Sector *	64 Neutral	$12.67B	9.74	7.58%	17015.08%	12.21%	-6.96%
LMND	47 Neutral	$2.27B	―	-35.57%	―	21.44%	2.99%

* Financial Sector Average

Performance Comparison

SKWD

Skyward Specialty Insurance Group, Inc.

60.97

23.91

64.52%

SAFT

Safety Insurance Group

81.62

8.04

10.93%

HCI

HCI Group

165.24

67.30

68.72%

LMND

Lemonade

30.92

14.47

87.96%

ROOT

Root

129.60

74.10

133.51%

BOW

Bowhead Specialty Holdings Inc.

36.92

10.44

39.43%

Skyward Specialty Insurance Group, Inc. Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q1-2025)

% Change Since: 13.81%|

Next Earnings Date:Aug 12, 2025

Earnings Call Sentiment Positive

Skyward Specialty Insurance Group, Inc. reported a strong first quarter with record net income and operating income, driven by significant growth in specific divisions and improved investment income. While the company faced challenges such as cat losses and declines in global property premiums, the strategic growth and successful reinsurance renewals demonstrate solid management and positioning in the market.

Q1-2025 Updates

Positive Updates

Record Net Income and Operating Income

Skyward Specialty Insurance Group, Inc. reported net income of $42 million and adjusted operating income of $37.3 million, marking the best performance in the company's history.

Strong Growth in Premiums

Gross written premiums grew by 17%, and net written premiums increased by 20% for the quarter, driven by Agriculture, Accident and Health, Specialty Programs, Transactional E and S, and Surety.

Improved Combined Ratio

The first quarter combined ratio was 90.5%, including 2.2 points of cat losses, a notable improvement driven by a 0.4 point better non-cat loss ratio compared to 2024.

Investment Income Increase

Net investment income rose to $19.3 million in the quarter, up from $18.3 million a year ago, with an embedded yield increase to 5.2% from 4.7%.

Successful Reinsurance Renewals

Property reinsurance programs, including cat programs, renewed orderly with better protection at lower costs and better terms.

Strategic Growth in Agriculture and Health Divisions

The Global Agriculture unit and Accident Health Division contributed significantly to growth, with innovative approaches and strategic positioning in high-return areas less exposed to P&C cycles.

Negative Updates

Impact of Cat Losses

The quarter experienced 2.2 points of cat losses, mainly from Midwest convective storms and California wildfires.

Global Property Premium Decline

Global property premiums decreased by 18.5%, although account retention remained strong.

Loss in Alternative Investments

The company reported a loss of $2.1 million in the alternative and strategic investments portfolio due to changes in the fair value of limited partnership investments.

Company Guidance

During the Skyward Specialty Insurance Group's first-quarter 2025 earnings call, the company reported a record net income of $42 million and an adjusted operating income of $37.3 million, with $28.5 million in underwriting income. The adjusted operating income was $0.90 per diluted share. Gross written premiums grew by 17%, while net written premiums increased by 20%, with a net retention rate of 64.1%. The combined ratio for the quarter was 90.5%, including 2.2 points of cat losses. The non-cat loss ratio improved to 60.2%, and the expense ratio was 28.1%. Net investment income rose to $19.3 million. The effective tax rate was 18.2%, and the company maintained a low 12% debt-to-capital ratio. The management highlighted strong growth in the Agriculture, Accident and Health, Transactional E&S, Surety, and Specialty Programs divisions, attributing it to the company's diversified portfolio and strategic execution. The company expects continued growth, targeting a mid-teens percentage for the full year.

Skyward Specialty Insurance Group, Inc. Corporate Events

Executive/Board ChangesShareholder Meetings

Skyward Specialty Elects Directors and Approves Compensation

Neutral

May 13, 2025

On May 7, 2025, Skyward Specialty Insurance Group, Inc. held its Annual Meeting of Shareholders. During the meeting, Marcia Dall and Anthony J. Kuczinski were elected as directors, and the compensation of named executive officers was approved. The company decided to hold annual advisory votes on executive compensation until 2031. Additionally, Ernst & Young LLP was ratified as the independent auditors for the fiscal year ending December 31, 2025.

The most recent analyst rating on (SKWD) stock is a Buy with a $54.00 price target. To see the full list of analyst forecasts on Skyward Specialty Insurance Group, Inc. stock, see the SKWD Stock Forecast page.

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.