RYAN

We rate RYAN SPECIALTY HOLDINGS, INC. (RYAN) as Avoid with a composite score of 38.7/100 at a current price of $38.85. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in quality (68th percentile) and value (43th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (11th percentile) and investment (27th percentile) tempers our overall conviction. We assign a Narrow Moat rating (41/100), High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

RYAN SPECIALTY HOLDINGS, INC. holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 38.7/100 places it at rank #3699 in our full 7,333-stock universe. With a $14.9B market capitalization, RYAN SPECIALTY HOLDINGS, INC. operates at meaningful scale within the Finance, Insurance, And Real Estate sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 9%, though momentum at the 11th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 100% (+23.5pp vs sector) narrow to operating margins of 16% (-0.8pp vs sector) and net margins of 6.7%, yielding a gross-to-net conversion rate of 7%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $38.85, RYAN SPECIALTY HOLDINGS, INC. is trading near fair value based on current fundamentals. Our value factor score of 43/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 25.3x (a 112% premium to the sector median of 11.9x), EV/EBITDA of 18.0x (at a premium), P/B of 4.3x, P/S of 1.8x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a High uncertainty rating to RYAN SPECIALTY HOLDINGS, INC.. Key risk factors include significant leverage (267% debt-to-equity), below-average price stability (38th percentile), low beta of 0.40 — while defensive, this may indicate limited upside participation in bull markets. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (267% debt-to-equity); below-average price stability (38th percentile); low beta of 0.40 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 38th percentile and quality factor at the 68th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 100% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate RYAN SPECIALTY HOLDINGS, INC.'s capital allocation as Poor. Key concerns include elevated leverage (267% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — RYAN SPECIALTY HOLDINGS, INC. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, RYAN SPECIALTY HOLDINGS, INC. receives a Avoid rating with a composite score of 38.7/100 (rank #3699 of 7,333). Our quantitative framework assigns a Narrow Moat (41/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 37/100.

Our analysis does not support a constructive view on RYAN SPECIALTY HOLDINGS, INC. at this time. The combination of the current quantitative profile, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.