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Palomar (PLMR) Up 3.8% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Palomar (PLMR - Free Report) . Shares have added about 3.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Palomar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Palomar's Q3 Earnings and Revenues Top Estimates
Palomar Holdings, Inc. reported third-quarter 2023 operating income of 80 cents per share, which beat the Zacks Consensus Estimate by 19.4%. The bottom line increased nearly threefold year over year. Palomar witnessed improved premiums and net investment income as well as losses and loss adjustment expenses.
Behind the Headlines
Total revenues improved 10.8% year over year to $92 million, mainly attributable to higher premiums and net investment income. The top line beat the Zacks Consensus Estimate by 1.3%.
Gross written premiums increased 24% year over year to $314 million. Our estimate was $255.8 million. Net earned premiums increased 10.1% year over year to $85.8 million. Our estimate was $84.3 million. The Zacks Consensus Estimate was pegged at $85 million.
Net investment income increased 61% year over year to $6 million, driven by higher yields on invested assets and a higher average balance of investments. The Zacks Consensus Estimate was pegged at $5.6 million. Our estimate was $5.1 million. Palomar witnessed an underwriting income of $20.7 million, up more than fivefold year over year. Adjusted underwriting income was nearly $25 million, rising more than threefold year over year.
Total expenses of $66.4 million increased 12% year over year due to loss and loss adjustment expenses. Our estimate was $70.9 million.
The loss ratio was 18.8, which improved 2080 basis points (bps) year over year. Our estimate was 18.2. The Zacks Consensus Estimate was pegged at 26.6. Adjusted combined ratio, excluding catastrophe losses, improved 1940 bps year over year to 70.9. The Zacks Consensus Estimate was pegged at 75.
Financial Update
Cash and cash equivalents declined 21.8% from 2022-end to $53.3 million at third-quarter 2023-end. Shareholder equity increased 9.5% from 2022-end to $421.3 million.
Annualized adjusted return on equity in the third quarter of 2023 was 22.3%, up 1240 bps year over year. PLMR bought back shares worth $6.6 million in the third quarter of 2023. As of Sep 30, 2023, $43.5 million remained under authorization.
2023 View
Palomar aims to achieve adjusted net income in the range of $90 million to $93 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Palomar has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Palomar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Palomar is part of the Zacks Insurance - Property and Casualty industry. Over the past month, Chubb (CB - Free Report) , a stock from the same industry, has gained 5%. The company reported its results for the quarter ended September 2023 more than a month ago.
Chubb reported revenues of $14.09 billion in the last reported quarter, representing a year-over-year change of +11.9%. EPS of $4.95 for the same period compares with $3.17 a year ago.
For the current quarter, Chubb is expected to post earnings of $4.92 per share, indicating a change of +21.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Chubb. Also, the stock has a VGM Score of B.
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Palomar (PLMR) Up 3.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Palomar (PLMR - Free Report) . Shares have added about 3.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Palomar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Palomar's Q3 Earnings and Revenues Top Estimates
Palomar Holdings, Inc. reported third-quarter 2023 operating income of 80 cents per share, which beat the Zacks Consensus Estimate by 19.4%. The bottom line increased nearly threefold year over year. Palomar witnessed improved premiums and net investment income as well as losses and loss adjustment expenses.
Behind the Headlines
Total revenues improved 10.8% year over year to $92 million, mainly attributable to higher premiums and net investment income. The top line beat the Zacks Consensus Estimate by 1.3%.
Gross written premiums increased 24% year over year to $314 million. Our estimate was $255.8 million. Net earned premiums increased 10.1% year over year to $85.8 million. Our estimate was $84.3 million. The Zacks Consensus Estimate was pegged at $85 million.
Net investment income increased 61% year over year to $6 million, driven by higher yields on invested assets and a higher average balance of investments. The Zacks Consensus Estimate was pegged at $5.6 million. Our estimate was $5.1 million. Palomar witnessed an underwriting income of $20.7 million, up more than fivefold year over year. Adjusted underwriting income was nearly $25 million, rising more than threefold year over year.
Total expenses of $66.4 million increased 12% year over year due to loss and loss adjustment expenses. Our estimate was $70.9 million.
The loss ratio was 18.8, which improved 2080 basis points (bps) year over year. Our estimate was 18.2. The Zacks Consensus Estimate was pegged at 26.6. Adjusted combined ratio, excluding catastrophe losses, improved 1940 bps year over year to 70.9. The Zacks Consensus Estimate was pegged at 75.
Financial Update
Cash and cash equivalents declined 21.8% from 2022-end to $53.3 million at third-quarter 2023-end. Shareholder equity increased 9.5% from 2022-end to $421.3 million.
Annualized adjusted return on equity in the third quarter of 2023 was 22.3%, up 1240 bps year over year. PLMR bought back shares worth $6.6 million in the third quarter of 2023. As of Sep 30, 2023, $43.5 million remained under authorization.
2023 View
Palomar aims to achieve adjusted net income in the range of $90 million to $93 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Palomar has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Palomar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Palomar is part of the Zacks Insurance - Property and Casualty industry. Over the past month, Chubb (CB - Free Report) , a stock from the same industry, has gained 5%. The company reported its results for the quarter ended September 2023 more than a month ago.
Chubb reported revenues of $14.09 billion in the last reported quarter, representing a year-over-year change of +11.9%. EPS of $4.95 for the same period compares with $3.17 a year ago.
For the current quarter, Chubb is expected to post earnings of $4.92 per share, indicating a change of +21.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Chubb. Also, the stock has a VGM Score of B.