Palomar Holdings, Inc. (PLMR - Free Report) is well-poised for growth, driven by new partnerships, strong premium retention rates, rate increases and effective capital deployment.
Zacks Rank & Price Performance
Palomar currently carries a Zacks Rank #3 (Hold). The stock has gained 24.3% year to date compared with the industry's growth of 5.1%.
Return on Equity (ROE)
ROE, a measure reflecting how efficiently a company utilizes shareholders’ money, was 17.6% in the trailing 12 months, better than the industry’s average of 6.9%.
Style Score
PLMR has a favorable VGM Score of B. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.
Growth Projections
The Zacks Consensus Estimate for Palomar’s 2023 earnings is pegged at $3.29, indicating an 18.8% increase from the year-ago reported figure on 15.8% higher revenues of $387.6 million.
The consensus estimate for Palomar’s 2024 earnings is pegged at $3.89, indicating an 18.2% increase from the year-ago reported figure on 22.1% higher revenues of $473.4 million.
Key Drivers
Palomar’s continuous efforts to sustain revenue momentum and initiatives, such as Palomar 2X, should strengthen its earnings base and revenue growth. Palomar’s premiums are likely to gain from a higher volume of policies written across lines of business, strong premium retention rates for an existing business, expansion of products’ geographic footprint and new partnerships.
The company’s Inland Marine and Excess Property business should also aid the top line in the future. Inland Marine business should benefit from the expansion of the company’s distribution footprint. Palomar’s property products should continue to benefit from rate increases and enhanced terms.
Higher policies written through the internal managing general agency and Palomar Insurance Agency are expected to boost the commission and other income of the insurer. Higher yields on invested assets, high-quality fixed-income securities, higher average balance of investments and an increase in fixed-income yields should continue to drive the net investment income going forward. For 2023, Palomar Holdings projects to generate adjusted net income between $88 million and $92 million.
The company acquired XCO Insurance Services, which will boost its professional liability margin and enhance its new specialty products. This move bodes well with the company’s strategic initiative to deliver predictable earnings in the future.
A solid liquidity position enables Palomar to enhance shareholder value via share buybacks. The insurer’s growing cash and cash equivalents indicate sufficient cash reserves to ensure financial stability. With respect to share buybacks, the company has a share repurchase plan of $100 million through Mar 31, 2024.
Palomar remains committed to protect its earnings through its current reinsurance program. The company completed the renewal of certain reinsurance programs, beginning Jun 1, 2023, of $188 million for the earthquake business. This move will also reduce earnings volatility in the future. Palomar can also take advantage of additional growth opportunities, given its low-risk profile due to the risk transfer arrangement.
Key Concerns
There are a few factors that have been impeding the stock’s growth lately.
The company has been experiencing an increase in operating expenses due to higher incurred losses and loss adjustment expenses, interest and acquisition expenses and other underwriting expenses. Such costs tend to weigh on the company’s margins. Exposure to catastrophic losses, being a property and casualty insurer, is also significant. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Stocks to Consider
Some better-ranked stocks from the Property and Casualty insurance industry are HCI Group, Inc. (HCI - Free Report) , RLI Corp. (RLI - Free Report) and Axis Capital Holdings Limited (AXS - Free Report) . HCI Group and RLI sport a Zacks Rank #1 (Strong Buy), while Axis Capital carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group beat estimates in three of the last trailing four quarters and missed once, the average being 308.8%. In the past year, HCI has lost 7%.
The Zacks Consensus Estimate for HCI’s 2023 and 2024 earnings per share indicates a year-over-year increase of 149.3% and 35.2%, respectively.
RLI’s earnings surpassed estimates in each of the last trailing four quarters, delivering an average earnings surprise being 43.5%. In the past year, RLI has gained 20.6%.
The Zacks Consensus Estimate for RLI’s 2023 earnings has moved 10.2% north in the past 60 days.
Axis Capital beat estimates in three of the last four quarters and missed once, the average being 6.5%. The Zacks Consensus Estimate for 2023 has moved 4.9% north in the past 60 days.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.74 and $8.60, indicating a year-over-year increase of 33.2% and 11.1%, respectively. In the past year, AXS has gained 0.5%.
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Palomar Holdings, Inc. (PLMR - Free Report) is well-poised for growth, driven by new partnerships, strong premium retention rates, rate increases and effective capital deployment.
Zacks Rank & Price Performance
Palomar currently carries a Zacks Rank #3 (Hold). The stock has gained 24.3% year to date compared with the industry's growth of 5.1%.
Return on Equity (ROE)
ROE, a measure reflecting how efficiently a company utilizes shareholders’ money, was 17.6% in the trailing 12 months, better than the industry’s average of 6.9%.
Style Score
PLMR has a favorable VGM Score of B. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.
Growth Projections
The Zacks Consensus Estimate for Palomar’s 2023 earnings is pegged at $3.29, indicating an 18.8% increase from the year-ago reported figure on 15.8% higher revenues of $387.6 million.
The consensus estimate for Palomar’s 2024 earnings is pegged at $3.89, indicating an 18.2% increase from the year-ago reported figure on 22.1% higher revenues of $473.4 million.
Key Drivers
Palomar’s continuous efforts to sustain revenue momentum and initiatives, such as Palomar 2X, should strengthen its earnings base and revenue growth. Palomar’s premiums are likely to gain from a higher volume of policies written across lines of business, strong premium retention rates for an existing business, expansion of products’ geographic footprint and new partnerships.
The company’s Inland Marine and Excess Property business should also aid the top line in the future. Inland Marine business should benefit from the expansion of the company’s distribution footprint. Palomar’s property products should continue to benefit from rate increases and enhanced terms.
Higher policies written through the internal managing general agency and Palomar Insurance Agency are expected to boost the commission and other income of the insurer. Higher yields on invested assets, high-quality fixed-income securities, higher average balance of investments and an increase in fixed-income yields should continue to drive the net investment income going forward. For 2023, Palomar Holdings projects to generate adjusted net income between $88 million and $92 million.
The company acquired XCO Insurance Services, which will boost its professional liability margin and enhance its new specialty products. This move bodes well with the company’s strategic initiative to deliver predictable earnings in the future.
A solid liquidity position enables Palomar to enhance shareholder value via share buybacks. The insurer’s growing cash and cash equivalents indicate sufficient cash reserves to ensure financial stability. With respect to share buybacks, the company has a share repurchase plan of $100 million through Mar 31, 2024.
Palomar remains committed to protect its earnings through its current reinsurance program. The company completed the renewal of certain reinsurance programs, beginning Jun 1, 2023, of $188 million for the earthquake business. This move will also reduce earnings volatility in the future. Palomar can also take advantage of additional growth opportunities, given its low-risk profile due to the risk transfer arrangement.
Key Concerns
There are a few factors that have been impeding the stock’s growth lately.
The company has been experiencing an increase in operating expenses due to higher incurred losses and loss adjustment expenses, interest and acquisition expenses and other underwriting expenses. Such costs tend to weigh on the company’s margins. Exposure to catastrophic losses, being a property and casualty insurer, is also significant. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Stocks to Consider
Some better-ranked stocks from the Property and Casualty insurance industry are HCI Group, Inc. (HCI - Free Report) , RLI Corp. (RLI - Free Report) and Axis Capital Holdings Limited (AXS - Free Report) . HCI Group and RLI sport a Zacks Rank #1 (Strong Buy), while Axis Capital carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group beat estimates in three of the last trailing four quarters and missed once, the average being 308.8%. In the past year, HCI has lost 7%.
The Zacks Consensus Estimate for HCI’s 2023 and 2024 earnings per share indicates a year-over-year increase of 149.3% and 35.2%, respectively.
RLI’s earnings surpassed estimates in each of the last trailing four quarters, delivering an average earnings surprise being 43.5%. In the past year, RLI has gained 20.6%.
The Zacks Consensus Estimate for RLI’s 2023 earnings has moved 10.2% north in the past 60 days.
Axis Capital beat estimates in three of the last four quarters and missed once, the average being 6.5%. The Zacks Consensus Estimate for 2023 has moved 4.9% north in the past 60 days.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.74 and $8.60, indicating a year-over-year increase of 33.2% and 11.1%, respectively. In the past year, AXS has gained 0.5%.
Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry
Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in? If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.
>>Send me my free report on the top 5 EV stocks<<
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