Is LMND a high-quality business?

AlphaMadera's AlphaQuality grade scores Lemonade, Inc. on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how LMND compares to a Buffett-style quality bar.

What is Lemonade, Inc.'s AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to LMND based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes LMND a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

LMND - Lemonade, Inc.

Price: -- -- | CONSENSUS: Buy DETAILS | PRICE TARGET: $67.80 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Banks, Insurers & Asset Managers

AlphaQuality — archetype-weighted quantitative grade

F 30.0 / 100 pillar composite

Composite Grade

Composite of six pillars weighted for banks, insurers & asset managers businesses. Purely quantitative — the six pillars score only reported financials, no analyst input.

⚠ 5 of the last 5 fiscal years showed negative net income — AlphaQuality will not grade above F for persistent unprofitability in a banks, insurers & asset managers business.

Grade overrides the 30.0 pillar composite because hard gates always win. Use the pillar breakdown below to see where the underlying numbers sit.

Profitability

Weight: 25%

B- 68.1

Scored using loss ratio — insurer-archetype substitution.

Loss Ratio 64.7% 51/100
Loss Ratio Trend -3.08 pp/yr 100/100

Capital Efficiency

Weight: 15%

F 0.0

5yr Avg ROE -31.5% 0/100
5yr Share-Count CAGR 5.4% 0/100

Growth Quality

Weight: 10%

A+ 100.0

Scored using premium growth cross-checked against loss-ratio trend — insurer-archetype substitution.

5yr Revenue CAGR (fallback) 50.9% 100/100
Loss Ratio Trend (growth quality check) -3.08 pp/yr 100/100
Revenue-Growth Years (5) 5/5 100/100

Cash Generation

Weight: 15%

A 91.4

Scored using reserve development and loss-ratio stability — insurer-archetype substitution.

Reserve Development 5.7% 100/100
Loss Ratio Stability (σ) 0.14 79/100

Balance Sheet

Weight: 25%

A+ 94.1

Scored using premiums-to-surplus — insurer-archetype substitution.

Premiums / Surplus 1.01x 90/100
Interest Coverage (EBIT/Int) 30.00x 100/100

Stability

Weight: 10%

B 69.7

Negative-Revenue Years (5) 0/5 100/100
Piotroski F-Score 4 44/100

0 of 5 gurus held; 1 full exit.

Holders: 0 -5
Avg Δ position: —
New buys: 0
Full exits: 1

Laffont sold -100%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (25%) — Loss Ratio, Loss Ratio Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (10%) — 5yr Revenue CAGR (fallback), Loss Ratio Trend (growth quality check), Revenue-Growth Years (5)
Cash Generation (15%) — Reserve Development, Loss Ratio Stability (σ)
Balance Sheet (25%) — Premiums / Surplus, Interest Coverage (EBIT/Int)
Stability (10%) — Negative-Revenue Years (5), Piotroski F-Score

The six pillars read only reported financial-statement fields — no analyst targets or consensus ratings. The archetype that picks which pillar formulas apply is not fully price-free, though: it can route a company to the distressed/ungradable archetype based on price vs. its 52-week high, and beta affects one classification check. A minimum of 5 fiscal years of audited statements is required. Insurers and banks are graded on their own methodology — insurers on loss ratio, its trend and stability, and premiums-to-surplus; banks on the efficiency ratio, its trend and stability, and equity-to-assets — rather than on industrial margin/ROIC signals. Distressed, highly leveraged infrastructure, asset-manager, and other financial businesses are declared ungradable rather than forced into a numeric score.