Kinsale Capital Trades Below 50-Day SMA: How to Play the Stock?

Kinsale Capital Group, Inc. KNSL has been trading below its 50-day simple moving average (SMA), signaling a short-term bearish trend.

The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend.

Price Performance of KNSL

Shares of Kinsale Capitalhave lost 10.7% year to date, underperforming its industry, the Finance sector, and the Zacks S&P 500 Composite’s growth of 8.5%, 14.1% and 13.8%, respectively, in the same time frame.

The insurer has a market capitalization of $9.7 billion. The average volume of shares traded in the last three months was 0.2 million.

KNSL vs Industry, Sector & S&P 500 YTD

KNSL Shares are Expensive

Shares of KNSL are trading at a premium compared to the Zacks Insurance - Property and Casualty industry. Its price-to-book value of 5.62X is higher than the industry average of 1.55X.

However, shares of other insurers such as Arch Capital Group Ltd. ACGL and CNA Financial Corporation CNA are trading at a multiple lower than the industry average. Arch Capital is trading at 1.51 and CNA Financialis trading at 1.16. However, American Financial Group, Inc. AFG shares are trading at a premium at 2.65.

Projections for KNSL

The Zacks Consensus Estimate for Kinsale Capital’s 2025 earnings per share indicates a year-over-year increase of 14.1%. The consensus estimate for revenues is pegged at $1.8 billion, implying a year-over-year improvement of 13.4%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 12.8% and 8.8%, respectively, from the corresponding 2025 estimates. 

The expected long-term earnings growth rate is pegged at 14.9%, better than the industry average of 7%. Kinsale Capital has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.

Optimistic Analyst Sentiment on KNSL

The Zacks Consensus Estimate for 2025 and 2026 earnings has increased 0.1% and 0.3% in the past 30 days, respectively.

Average Target Price for KNSL Suggests Upside

Based on short-term price targets offered by nine analysts, the Zacks average price target is $499.11 per share. The average indicates a potential 16.1% upside from the last closing price.

KNSL’s Favorable Return on Capital 

Return on equity (ROE) for the trailing 12 months was 25.9%, comparing favorably with the industry’s 7.7%. This reflects its efficiency in utilizing shareholders’ funds. 

Return on invested capital in the trailing 12 months was 22.5%, better than the industry average of 5.9%, reflecting KNSL’s efficiency in utilizing funds to generate income.

Key Points For KNSL

Kinsale Capital has strengthened its presence in the U.S. excess and surplus (E&S) market by leaning on key organic drivers. Consistent premium growth, healthy broker submissions, solid renewal activity, and disciplined underwriting have been central to its progress. These elements have translated into steady revenue expansion and reinforced its market position. With favorable pricing trends and a growing product mix providing further support, Kinsale Capital is well-positioned to maintain its growth trajectory in the years ahead.

This momentum is further reinforced by favorable shifts in the excess and surplus (E&S) market, as more business moves away from standard carriers. Kinsale Capital’s sharp focus on this space has helped it maintain stronger margins and lower loss ratios, backed by disciplined underwriting.

Growth has also been evident in its transportation divisions, including commercial auto and high-value homeowners, where more business is flowing into the E&S segment. These areas provide additional room for expansion, supporting the company’s long-term outlook.

To support its growth in the E&S market, Kinsale Capital has developed a digital platform that streamlines underwriting, making it faster and more efficient. By cutting down manual steps and improving workflows, it helps manage costs and enhances customer interactions. The platform’s data tools support smarter decisions, and without legacy systems, the company can innovate more freely. This setup gives Kinsale Capital an edge as it continues to expand in key segments, such as transportation and high-value homeowners.

Alongside its operational strengths, Kinsale Capital has benefited from steady investment income, supported by healthy cash flows and favorable market conditions. Its disciplined underwriting approach, combined with a strong independent broker network, has helped maintain low loss ratios and consistent profitability.

Building on its strong operational performance, Kinsale Capital also benefits from a solid balance sheet. Its debt-to-capital ratio of 9.66% is well below the industry average of 16.11%, reflecting prudent financial management, while its times interest earned ratio of 56.03 far exceeds the industry average of 17.02, highlighting its ability to meet debt obligations comfortably.

Wealth Distribution of KNSL

Kinsale Capital continues to focus on creating shareholder value through consistent capital returns. Over the past five years, the company has increased its dividend five times, reflecting a total payout growth of 12.43%, while the current payout ratio stands at 4%. Additionally, in October 2024, the board approved a $100 million share buyback program, with $70 million remaining under the current authorization.

Conclusion

Overall, Kinsale Capital’s strong organic growth, disciplined underwriting and solid financial position, combined with consistent shareholder returns, underscore its resilience and long-term potential. Its focus on operational efficiency and strategic market segments positions the company well for continued expansion.

Given its strong growth prospects, favorable estimates, and an attractive return on capital, it is better to add this Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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