WTM

We rate WHITE MOUNTAINS INSURANCE GROUP LTD (WTM) as a Hold with a composite score of 61.7/100 at a current price of $2214.83. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in value (86th percentile) and stability (72th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (33th percentile) and momentum (64th percentile) tempers our overall conviction. We assign a Narrow Moat rating (51/100), Low uncertainty, and Standard capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends. 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.

WHITE MOUNTAINS INSURANCE GROUP LTD holds an above-average position (#24 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 61.7/100 places it at rank #527 in our full 7,333-stock universe. At $4.3B in market capitalization, WHITE MOUNTAINS INSURANCE GROUP LTD is a mid-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

The outlook is moderately positive, with revenue expanding at 2% and favorable momentum (64th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 96% (+19.8pp vs sector) narrow to operating margins of 22% (+4.8pp vs sector) and net margins of 20.1%, yielding a gross-to-net conversion rate of 21%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $2214.83, WHITE MOUNTAINS INSURANCE GROUP LTD appears undervalued relative to its fundamentals. Our value factor score of 86/100 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. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 9.0x (a 25% discount to the sector median of 11.9x), EV/EBITDA of 9.6x (at a premium), P/B of 1.0x, P/S of 1.9x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to WHITE MOUNTAINS INSURANCE GROUP LTD. The company exhibits strong financial stability with a beta of 0.34, conservative leverage (16% D/E), and a stability factor in the 72th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.34 — 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 72th percentile and quality factor at the 71th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 96% provide a buffer against cost pressures; conservative leverage (16% D/E) limits balance sheet risk; above-average stability (72th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate WHITE MOUNTAINS INSURANCE GROUP LTD's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 11.0%, and the balance sheet is managed within acceptable parameters (D/E: 16%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; WHITE MOUNTAINS INSURANCE GROUP LTD falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 0.06% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, WHITE MOUNTAINS INSURANCE GROUP LTD receives a Hold rating with a composite score of 61.7/100 (rank #527 of 7,333). Our quantitative framework assigns a Narrow Moat (51/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 65/100.

Our analysis supports a neutral stance on WHITE MOUNTAINS INSURANCE GROUP LTD. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.