On the four Ms, Goosehead Insurance Inc -A earns 64 for management and 75 for moat. The management score rests on a return on invested capital of 15.7% and a gross margin of 46.2% — figures that describe a business earning a respectable return on what it employs. Shareholder equity is negative, so the debt-to-equity figure is not meaningful here — usually the mark of heavy buybacks rather than distress, but worth checking.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 15.0% a year, below the 26.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 30.0x. That produces an intrinsic value of $41.10, a 10-CAP price of $23.10 and a payback time price of $36.47, with the value zone set at the highest of the three, $36.47. Today's price of $47.15 is 29% above it.
The price is above the value zone and the business scores 75 for moat and 64 for management. Neither test argues for paying up here.
| Price | $47.15 |
| Market cap | $1.8B |
| P/E ratio | 34.4x |
| Return on invested capital | 15.7% |
| Gross margin | 46.2% |
| Debt to equity | -3.69x |
| Free cash flow yield | 4.7% |
| Growth rate used | 15.0% |
| Growth rate measured | 26.0% |
| Exit multiple assumed | 30.0x |
| Company | Moat | Buy price |
| Ryan Specialty Holdings Inc (RYAN) | 77 | $61.93 |
| Brown & Brown (BRO) | 95 | $69.93 |
| Willis Towers Watson (WTW) | 64 | $187.60 |
| Aon (AON) | 81 | $188.37 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Goosehead Insurance Inc -A rather than accepting ours.