It has been about a month since the last earnings report for Palomar (PLMR - Free Report) . Shares have added about 16.6% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Palomar Q2 Earnings Top Estimates, Revenues Rise Y/Y
Palomar Holdings reported second-quarter 2021 operating income of 51 cents per share, beating the Zacks Consensus Estimate by 2%. The bottom line declined 1.9% year over year.
Palomar witnessed improved premiums and net investment income, partially offset by higher expenses.
Behind the Headlines
Total revenues improved 35.7% year over year to $57 million, mainly attributable to higher premiums, net investment income, and commission and other income. The top line beat the Zacks Consensus Estimate by 2.2%.
Gross written premiums increased 54.4% year over year to $129.4 million. Net written premiums surged 45.1% year over year to $77.8 million.
Net investment income increased 3.8% year over year to $2.2 million, driven by higher average balance of investments, partially offset by lower yields on invested assets.
Palomar witnessed underwriting income of $13 million, up 4.9% year over year. Results were impacted by $3.9 million of additional reinsurance charges from winter storm Uri.
Total expenses of $42.2 million increased 51.6% year over year due to higher losses and loss adjustment expenses, acquisition and underwriting expenses. Loss ratio deteriorated 320 basis points (bps) to 13.3.
Adjusted combined ratio, excluding catastrophe losses, deteriorated 870 bps year over year to 73.8.
Financial Update
Cash and cash equivalents decreased 25.7% from the 2020-end level to about $24.9 million at second quarter 2021-end.
Shareholder equity increased 3.6% from 2020-end to $376.7 million.
Annualized adjusted return on equity was 14.1% for the reported quarter, contracting 230 bps year over year.
2021 View Reaffirmed
Palomar estimates adjusted net income between $64 million and $69 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Palomar has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Palomar has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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It has been about a month since the last earnings report for Palomar (PLMR - Free Report) . Shares have added about 16.6% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Palomar Q2 Earnings Top Estimates, Revenues Rise Y/Y
Palomar Holdings reported second-quarter 2021 operating income of 51 cents per share, beating the Zacks Consensus Estimate by 2%. The bottom line declined 1.9% year over year.
Palomar witnessed improved premiums and net investment income, partially offset by higher expenses.
Behind the Headlines
Total revenues improved 35.7% year over year to $57 million, mainly attributable to higher premiums, net investment income, and commission and other income. The top line beat the Zacks Consensus Estimate by 2.2%.
Gross written premiums increased 54.4% year over year to $129.4 million. Net written premiums surged 45.1% year over year to $77.8 million.
Net investment income increased 3.8% year over year to $2.2 million, driven by higher average balance of investments, partially offset by lower yields on invested assets.
Palomar witnessed underwriting income of $13 million, up 4.9% year over year. Results were impacted by $3.9 million of additional reinsurance charges from winter storm Uri.
Total expenses of $42.2 million increased 51.6% year over year due to higher losses and loss adjustment expenses, acquisition and underwriting expenses. Loss ratio deteriorated 320 basis points (bps) to 13.3.
Adjusted combined ratio, excluding catastrophe losses, deteriorated 870 bps year over year to 73.8.
Financial Update
Cash and cash equivalents decreased 25.7% from the 2020-end level to about $24.9 million at second quarter 2021-end.
Shareholder equity increased 3.6% from 2020-end to $376.7 million.
Annualized adjusted return on equity was 14.1% for the reported quarter, contracting 230 bps year over year.
2021 View Reaffirmed
Palomar estimates adjusted net income between $64 million and $69 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Palomar has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Palomar has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Zacks Naming Top 10 Stocks for 2024
Want to be tipped off early to our 10 top picks for the entirety of 2024?
History suggests their performance could be sensational.
From 2012 (when our Director of Research, Sheraz Mian assumed responsibility for the portfolio) through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2024. Don’t miss your chance to get in on these stocks when they’re released on January 2.
Be First to New Top 10 Stocks >>
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