Ryan Specialty shares fell by -2.8% during the day's afternoon session, and are now trading at a price of $61.0. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Ryan Specialty's Valuation Is in Line With Its Sector Averages:
Ryan Specialty Holdings, Inc. operates as a service provider of specialty products and solutions for insurance brokers, agents, and carriers in the United States, Canada, the United Kingdom, Europe, and Singapore. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 20.04 and an average price to book (P/B) ratio of 1.86. In contrast, Ryan Specialty has a trailing 12 month P/E ratio of 79.2 and a P/B ratio of 12.06.
Ryan Specialty has moved 47.7% over the last year compared to 24.7% for the S&P 500 — a difference of 23.0%. Ryan Specialty has a 52 week high of $75.97 and a 52 week low of $41.65.
Strong Revenue Growth but Significant Leverage Levels:
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Revenue (M) | $765 | $1,018 | $1,433 | $1,725 | $2,078 |
| Interest Income (M) | $36 | $47 | $79 | $105 | $120 |
| Operating Margins | 13% | 16% | 13% | 17% | 17% |
| Net Margins | 8% | 7% | 5% | 4% | 3% |
| Net Income (M) | $64 | $68 | $66 | $61 | $61 |
| Depreciation & Amort. (M) | $5 | $4 | $5 | $6 | $9 |
| Free Cash Flow (M) | $142 | $131 | $264 | $320 | $447 |
| CAPEX (M) | $8 | $2 | $10 | $15 | $30 |
| Total Debt (M) | n/a | $1,605 | $1,614 | $2,007 | $2,006 |
| Net Debt / EBITDA | nan | 4.36 | 6.41 | 3.44 | 3.17 |
| Current Ratio | nan | 1.0 | 1.03 | 1.24 | 1.16 |
Ryan Specialty has rapidly growing revenues and increasing reinvestment in the business, generally positive cash flows, and decent operating margins with a stable trend. Furthermore, Ryan Specialty has just enough current assets to cover current liabilities, as shown by its current ratio of 1.16 and significant leverage levels.
