Goosehead Insurance

Goosehead Insurance Inc earns a 4-star quantitative star rating, reflecting our opinion that this share class offers a somewhat attractive opportunity for investors. The stock currently trades at a 22% discount to our quantitative fair value estimate of $56.26 per share; however, caution is warranted due to this estimate's high uncertainty rating.

The company's solid growth strengthens our fair value estimate. Consistent revenue and earnings growth indicates a company's potential for increased market share and profitability. Reflecting the firm's growth is its cash flow per share growth, which ranks in the top 30% compared with peers globally. This indicates a rapid rate of growth in cash flow available for reinvestment or return to shareholders, which contributes to our view that shares are cheap.

On a different note, the firm's valuation metrics are potentially concerning. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. The firm's book value yield of -10.4%, for example, lies in the bottom 10% compared with global peers. The market value of this company's shares looks expensive relative to the book (accounting) value of equity, which, despite our favorable price/fair value ratio, is a negative attribute.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has been a laggard relative to the broader universe over the past year. This underperformance makes the stock appear cheap, which portends a buying opportunity in light of other contributors to our model.

The company's narrow quantitative moat rating indicates it could outearn its cost of capital and maintain robust margins for 10 years or longer. In addition, the company's moderate financial health score is decent and doesn't seriously concern us with regard to financial distress.