Ryan Specialty Holdings Inc scores 45 for management and 77 for moat. The management score rests on a return on invested capital of 4.3% and a gross margin of 90.6% — figures that describe returns closer to the cost of the capital behind them. The balance sheet carries debt at 5.45x equity, which magnifies both the returns above and the risk beneath them. The solid moat and mixed management are not the same judgement, and the gap between them is where the argument about this business sits.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 15.0% a year, below the 25.0% 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 $23.33, a 10-CAP price of $39.23 and a payback time price of $61.93, with the value zone set at the highest of the three, $61.93. Today's price of $38.39 sits inside that zone.
The price sits inside the value zone, but the business scores 77 for moat and 45 for management. Cheap and good are different tests, and only one of them is passed here.
| Price | $38.39 |
| Market cap | $5.0B |
| P/E ratio | 49.4x |
| Return on invested capital | 4.3% |
| Gross margin | 90.6% |
| Debt to equity | 5.45x |
| Free cash flow yield | 8.8% |
| Growth rate used | 15.0% |
| Growth rate measured | 25.0% |
| Exit multiple assumed | 30.0x |
| Company | Moat | Buy price |
| Goosehead Insurance Inc -A (GSHD) | 75 | $36.47 |
| 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 Ryan Specialty Holdings Inc rather than accepting ours.