Bowhead Specialty Holdings Inc. (NYSE: BOW)

Sector: Financial Services Industry: Insurance - Property & Casualty CIK: 0002002473
Market Cap 802.51 Mn
P/B 1.86
P/E 15.27
P/S 1.55
ROIC (Qtr) 14.00
Div Yield % 0.00
Rev 1y % (Qtr) 23.27
Total Debt (Qtr) 0.00
Debt/Equity (Qtr) 0.00
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About

Investment thesis

Bull case

  • Operating cash flow of 332.86M provides exceptional 326.97x coverage of interest expenses 1.02M, showing strong debt service capability.
  • Operating cash flow of 332.86M provides strong 75.29x coverage of stock compensation 4.42M, indicating sustainable incentive practices.
  • Strong operating cash flow of 332.86M provides 2.35x coverage of SG&A expenses 141.45M, showing efficient operational cost management.
  • Robust free cash flow of 328.30M exceeds capital expenditure of 4.56M by 71.93x, indicating strong organic growth funding capability.
  • Free cash flow of 328.30M provides exceptional 322.49x coverage of interest expense 1.02M, showing strong debt service ability.

Bear case

  • Operating cash flow of 332.86M barely covers its investment activities of (243.86M), with a coverage ratio of -1.36, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 332.86M provides insufficient coverage of deferred revenue obligations of 536.11M, which is 0.62x, raising concerns about future service delivery capabilities.
  • R&D investment of 0 represents just 0x of SG&A expenses of 141.45M, indicating potential underinvestment in innovation relative to administrative overhead.
  • Deferred revenue of 536.11M represents 1.24x of shareholder equity 431.04M, indicating significant future service obligations relative to capital base.
  • Fixed assets of 9.68M showing 2.74x ratio to depreciation of 3.53M indicates aging infrastructure requiring significant near-term capital investment.

Peer comparison

Companies in the Insurance - Property & Casualty
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 PGR Progressive Corp/Oh/ 121.46 Bn 30.80 3.11 6.90 Bn
2 CB Chubb Ltd 109.27 Bn 36.88 5.64 21.01 Bn
3 ALL Allstate Corp 69.21 Bn 29.01 1.62 8.09 Bn
4 TRV Travelers Companies, Inc. 67.61 Bn 10.75 1.38 9.27 Bn
5 HIG Hartford Insurance Group, Inc. 61.19 Bn 37.09 3.27 4.37 Bn
6 WRB Berkley W R Corp 38.52 Bn 124.63 8.69 2.87 Bn
7 CINF Cincinnati Financial Corp 26.91 Bn 74.14 6.73 0.88 Bn
8 MKL Markel Group Inc. 26.46 Bn 13.00 1.68 4.28 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.30 0.50
EV to Cash from Ops. EV/CFO 1.91 -16.03
EV to Debt EV to Debt 0.00 11.42
EV to EBIT EV/EBIT 9.25 22.13
EV to EBITDA EV/EBITDA 8.22 17.53
EV to Free Cash Flow [EV/FCF] EV/FCF 1.94 68.07
EV to Market Cap EV to Market Cap 0.79 0.91
EV to Revenue EV/Rev 1.23 2.31
Price to Book Value [P/B] P/B 1.86 2.97
Price to Earnings [P/E] P/E 15.27 29.62
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 7.41
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 19.66
Dividend per Basic Share Div per Share (Qtr) 0.00 1.49
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 37.69
Interest Coverage Int. cover (Qtr) 67.54 -9.19
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -29.33 -17.83
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 55.07 30.27
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 16.34
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 79.06 62.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 64.75 35.62
EBIT Growth (1y) % EBIT 1y % (Qtr) 78.26 56.25
EBT Growth (1y) % EBT 1y % (Qtr) 77.81 52.70
EPS Growth (1y) % EPS 1y % (Qtr) 52.83 48.20
FCF Growth (1y) % FCF 1y % (Qtr) 12.93 15.47
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 38.63 16.55
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.25 0.38
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.45
Cash Ratio Cash Ratio 0.00 0.02
Current Ratio Current Ratio 0.00 0.06
Debt to Equity Ratio Debt/Equity (Qtr) 0.00 0.23
Interest Cover Ratio Int Coverage (Qtr) 67.54 -9.19
Times Interest Earned Times Interest Earned (Qtr) 67.54 -9.19
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 13.90 14.01
EBIT Margin % EBIT Margin % (Qtr) 13.24 13.05
EBT Margin % EBT Margin % (Qtr) 13.05 12.25
Gross Margin % Gross Margin % (Qtr) 41.50 40.49
Net Profit Margin % Net Margin % (Qtr) 10.10 9.63