Is Skyward Stock a Buy After the Pullback and Higher Leverage?

Skyward Specialty Insurance Group, Inc. SKWD has struggled to keep pace with the broader market despite delivering strong operating results. Shares are down 15.1% year to date, lagging both the industry and the S&P 500, while peers like Allstate Corporation ALL and Heritage Insurance HRTG have seen more modest declines.

YTD Price Performance – SKWD, ALL, HRTG, Industry & S&P 500

Image Source: Zacks Investment Research

That gap brings the focus to a key question: is the pullback an opportunity, or a signal of rising risks?

Let’s dig deeper.

The P&C cycle appears to be easing, with pricing momentum slowing and competition picking up. Skyward ended 2025 with debt-to-capital below 11%, but that is expected to rise to 28–29% following the Apollo acquisition. Meanwhile, the industry average for total debt to total capital was at 15.4% at the end of 2025. Even if the deal is strategically sound, the jump in leverage introduces near-term uncertainty.

Does Valuation Reflect Skepticism?

On valuation, SKWD appears inexpensive on the surface. The stock trades at about 9.24X forward 12-month earnings compared with its three-year median of 12.92X and 26.77X of the industry. Meanwhile, peers like Allstate and Heritage aren’t exactly expensive either, trading at 8.12X and 5.89X forward earnings, respectively.

Image Source: Zacks Investment Research

Execution Remains Strong as Mix Evolves

Operationally, the company continues to deliver. Fourth-quarter 2025 revenue grew 26.7% year over year to $385.6 million, while adjusted earnings rose 46% to $1.17 per share. Underwriting execution supported the results.

Gross written premiums witnessed strong momentum, supported by Specialty Programs, Accident & Health and Surety. Also, the combined ratio improved 730 basis points from the prior-year quarter to 88.5%, while underwriting income jumped to $41 million, up roughly 235% year over year. Those are tangible markers that profitability improved alongside growth.

The core bull case centers on a more cycle-resilient earnings mix. Roughly half of the portfolio is positioned in areas viewed as less exposed to traditional property and casualty cycles, helping the company emphasize risk-adjusted returns rather than pure volume. The Apollo acquisition adds another lever with capital-light fee income and profit-commission upside.

What Do Estimates for SKWD Say?

The Zacks Consensus Estimate for 2026 and 2027 revenues points to a year-over-year increase of 26.4% and 12.2%, respectively. The jump aligns with mix shift and Apollo integration. The consensus mark for 2026 and 2027 earnings signal 18.3% and 14.8% growth, respectively. It has witnessed two upward estimate revisions over the past month and no downward movement. SKWD beat earnings estimates in each of the past four quarters, with an average surprise of 16.1%

Skyward Specialty Insurance Group, Inc. Price, Consensus and EPS Surprise

Skyward Specialty Insurance Group, Inc. price-consensus-eps-surprise-chart | Skyward Specialty Insurance Group, Inc. Quote

Bottom Line

The pullback in Skyward reflects higher leverage and more cautious industry expectations rather than any meaningful deterioration in fundamentals. While near-term sentiment may stay restrained, strong execution and an evolving, more diversified earnings mix support the longer-term outlook. Backed by positive estimate revisions and a solid growth outlook, SKWD currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Free: See Our Top Stock And 4 Runners Up

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The Allstate Corporation (ALL): Free Stock Analysis Report

Heritage Insurance Holdings, Inc. (HRTG): Free Stock Analysis Report

Skyward Specialty Insurance Group, Inc. (SKWD): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research