GSHD · Goosehead Insurance
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $56.88
Note written ·
Price against the kill line
19.1% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $56.88, on record since 11 November 2026. The shares are down 28.6% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $56.88, the 5 November 2026 close before the restatement was disclosed, which would show the shares leading again. Amended filings that report no material weakness would also show the case failing.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Financials
Quarter to 30 June 2026, filed 23 July 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 113
- Revenue, change on a year (%)
- +20.6
- Operating margin (%)
- 23.5
- Free cash flow, four quarters ($M)
- 79.7
- Net cash, cash less debt ($M)
- −294
- Price to earnings (×)
- 46.6
- Enterprise value to sales (×)
- 4.8
- Enterprise value to operating income (×)
- 20.7
All filed numbers
What Goosehead Insurance reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 113 | +20.6 | 23.5 |
| first filed | 93.1 | +23.1 | 16.1 |
| first filed | 105 | +12.1 | 29.4 |
| first filed | 90.4 | +15.9 | 23.5 |
| first filed | 94.0 | +20.4 | 16.7 |
| first filed | 75.6 | +17.3 | 8.8 |
| Pre-tax income ($M) | 21.1 |
| Net income ($M) four quarters: 35.3 | 10.1 |
| Diluted shares, change on a year (%) against the quarter to 30 June 2025 | −7.4 |
| Operating cash flow ($M) | 86.2 |
| Capital spending ($M) | 6.5 |
| Free cash flow ($M) | 79.7 |
| Cash and short-term investments ($M) | 23.7 |
| Debt ($M) non-current long-term debt plus current maturities | 317 |
| Net cash, cash less debt ($M) | −294 |
| Deferred revenue ($M) −21.4% on a year | 14.1 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | Not reported |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | −112 |
| Market value ($M) | 1,643 |
| Enterprise value, market value plus net debt ($M) | 1,937 |
| Enterprise value to sales (×) | 4.8 |
| Enterprise value to operating income (×) | 20.7 |
| Price to earnings (×) | 46.6 |
| Price to book value (×) | Not meaningful |
| Free-cash-flow yield (%) | 4.8 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 6.7% of shares outstanding sold short, 5.8 days of average trading to cover, −4.8% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $7.1M | $2.5M |
| 12 monthsfrom | $20.1M | $34.3M |
The thesis
Goosehead Insurance's shares are more likely to lag the S&P 500 over the next three months. The company has told investors that its 2023–2025 financial statements can no longer be relied upon, expects to report material weaknesses in internal controls, and has not filed its third-quarter Form 10-Q. The amended filings, a Form 10-K/A for 2025 and amended 10-Qs for the first two quarters of 2026, settle whether the restated figures hold and how wide the control failure is.
Operating growth in the preliminary third-quarter results was good. Core revenue rose 13% to $94.7 million from $83.9 million a year earlier, and the company reaffirmed its 2026 outlook (company 8-K, 9 November 2026). The market has looked past that. The shares closed at $54.69 on 9 November 2026, the last session before the release, and at $46.13 on 10 November 2026, the first session after it. The close on 12 November 2026 was $45.66.
The company says the restatement does not change cash or cash flows. It gave no dollar estimate of the effect on net income (Form NT 10-Q, 9 November 2026).
Bullish and bearish views on Goosehead Insurance, Inc.
The bull case on Goosehead Insurance, Inc. (GSHD), in brief: core growth accelerated. The bear case: controls failed over several years.
Bull case
- Core growth accelerated. Core revenue rose 13% in the third quarter against 10% in the second quarter, to $94.7 million (company 8-K, 9 November 2026). The company credits better client retention and new business from more producers.
- Client metrics improved. Client retention was 86% versus 85% a year earlier. Policies in force were about 2.12 million, up 14%, and total written premiums rose 11% to $1.31 billion (company 8-K, 9 November 2026).
- The outlook was reaffirmed. Management kept organic total-revenue growth at 12–19% and written-premium growth at 12–20%, and said the revenue range already reflects the restatement's expected effect (company 8-K, 9 November 2026).
- Cash is not affected. The company says the restatement is not expected to change cash or total cash flows from operating, investing or financing activities (Form NT 10-Q, 9 November 2026).
- A large holder bought and one analyst raised its target. Durable Capital Partners, a 10% owner, bought 150,000 shares on the open market at $47.32 on 22 September 2026 (SEC Form 4). Piper Sandler kept a Neutral rating and raised its target to $56 on 10 November 2026.
Bear case
- Controls failed over several years. The Audit Committee concluded on 6 November 2026 that the 2023–2025 statements and the first two quarters of 2026 should not be relied upon. The company expects to report one or more material weaknesses and to conclude its disclosure controls were not effective in each period (Form NT 10-Q, 9 November 2026).
- The third-quarter 10-Q is late. The company did not file by the 9 November 2026 due date and will file after the restatement is complete. It gave no filing date. The preliminary third-quarter figures are unaudited and may change materially (company 8-K, 9 November 2026).
- Two accounting errors, one still unquantified. Costs to obtain customer contracts were expensed instead of capitalized and amortized. Franchisee technology and errors-and-omissions program fees were netted against general and administrative expense instead of recorded as franchise revenue. The revenue reclassification is about $11 million to $16 million for 2025 and $5.5 million to $8.5 million for the first half of 2026. The net income effect was not quantified (Form NT 10-Q, 9 November 2026).
- Contingent commissions lifted total revenue. They were $10.0 million in the third quarter against $4.5 million a year earlier. Core revenue of $94.7 million was below the $95.6 million of the second quarter (company 8-Ks, 9 November 2026 and 22 July 2026).
- Legal and AI overhangs. Kehoe Law Firm announced an investigation of securities claims against the company on 10 November 2026. BofA Securities said on 23 September 2026 that Meta's Muse reopens the debate over insurance-distribution disintermediation and placed Goosehead among the most exposed names (The Insurer). The Investor Day that would address it moved from 13 November 2026 to 31 March 2027.
Price setup
The shares closed at $45.66 on 12 November 2026. That is below the 50-day average of $49.78 and the 200-day average of $49.99, and 42.8% below the 52-week intraday high of $79.85 set on 11 December 2025. The change over three months is −31.1%. The 52-week closing low is $34.37 on 3 June 2026.
The price gapped down between 9 November 2026 ($54.69) and 10 November 2026 ($46.13) and has held a narrow range since, with closes of $46.15 on 11 November 2026 and $45.66 on 12 November 2026. The market has priced in a restatement and expected control weaknesses. It has not priced in a further widening, because the periods and ranges are not yet filed.
Piper Sandler's $56 target on 10 November 2026 sits above the last close. Truist held a $48 target on 13 October 2026 and JPMorgan cut to $60 on 1 October 2026. Both predate the company's 9 November 2026 report and are not a read on the restatement.
Insider selling was concentrated in August. Serena Jones, a 10% owner, sold 29,750 Class A shares at $67.71–$70.00 (average $68.91) on 19 August 2026 and 20 August 2026, after converting derivative securities (SEC Form 4, 21 August 2026). Adrienne Kebodeaux sold 7,000 shares at $70.00 on 20 August 2026 (SEC Form 4, 24 August 2026).
Catalysts ahead
- TBD (no date announced): Form 10-K/A for 2025 and amended Form 10-Qs for the first two quarters of 2026. Shows the restated figures, whether more periods or larger amounts are involved, and how the material weaknesses are described.
- TBD (no date announced): Third-quarter 2026 Form 10-Q and full earnings release. Adds adjusted EBITDA and earnings per share and confirms or revises the preliminary 13% core revenue growth.
- 1 January 2027: Mark Jones, Jr. becomes president and CEO. The leadership handover comes before the Investor Day that would address the AI-agent concern.
- 31 March 2027: Rescheduled Investor Day (moved from 13 November 2026). Next planned platform for management to answer the AI-distribution concern and set out strategy after the handover.
What would change the view
A daily close above $56.88, the 5 November 2026 close before the restatement was disclosed, which would show the shares leading again. Amended filings that report no material weakness would also show the case failing.
What it trades with
Goosehead trades with insurance distributors and brokers as a group, and with the debate over AI shopping agents that followed Meta's Muse launch on 9 September 2026. Texas Capital estimated that about 60% of Goosehead's placed insurance is homeowners coverage, so home-insurance conditions and carrier profitability matter to contingent commissions. It is a small-cap Nasdaq stock and moves with small-company sentiment. Its Up-C structure, in which founders hold units that convert into Class A shares, can add supply without open-market purchase history.
The evidence, claim by claim (8)
- Preliminary third-quarter 2026 core revenue was $94.7 million, up 13% from $83.9 million; total revenues were $108.8–$110.8 million, about 17% growth at the midpoint. The figures are unaudited. Goosehead 8-K, preliminary third-quarter 2026 results · as of
- Third-quarter contingent commissions were $10.0 million versus $4.5 million a year earlier; nine-month total $36.4 million versus $13.5 million. Goosehead 8-K, preliminary third-quarter 2026 results · as of
- Total written premiums were $1.31 billion (up 11%), policies in force about 2.12 million (up 14%), and client retention 86% versus 85%. Goosehead 8-K, preliminary third-quarter 2026 results · as of
- The Audit Committee concluded on 6 November 2026 that 2023–2025 and first-half 2026 financial statements should not be relied upon; the company expects to report material weaknesses and ineffective disclosure controls. Goosehead Form NT 10-Q · as of
- Restatement adds about $11–$16 million to 2025 franchise revenue and general and administrative expense, and $5.5–$8.5 million for the first half of 2026, with no effect on operating income, net income or cash flows from that item. Goosehead Form NT 10-Q · as of
- 2026 outlook reaffirmed: organic total-revenue growth of 12–19% and written-premium growth of 12–20%. Goosehead 8-K, preliminary third-quarter 2026 results · as of
- Durable Capital Partners LP, a 10% owner, bought 150,000 shares on the open market at $47.32 on 22 September 2026. SEC Form 4 filed 24 September 2026 · as of
- Piper Sandler kept a Neutral rating on Goosehead and raised its price target to $56. Company news, Piper Sandler rating update · as of
Sources
Related · shared themes
BAC
Bank of America
Bank of America's shares look more likely to lag the S&P 500 as weak fees and trading, a $1.2 billion penalty and falling broker targets…
PLMR
Palomar Holdings
Palomar Holdings is more likely than not to beat the S&P 500 over three months because estimates keep rising after its fourth 2026 guidance…
AAMI
Acadian Asset Management
Acadian Asset Management's eleven straight quarters of client inflows, record fees and resumed buybacks give its shares a modest edge over…
C
Citigroup
Citigroup is modestly more likely to beat the S&P 500 over three months: its returns beat its 11% target while the shares fell 10.5% on…