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EverQuote (EVER) Up 18% YTD: Is There More Room for Upside?

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EverQuote Inc. (EVER - Free Report) shares have gained 18.2% year to date against the industry's decline of 29.7% and the Zacks S&P 500 composite’s increase of 1.8%. With market capitalization of $1.2 billion, average volume of shares traded in the last three months was 0.4 million.


The company continues to benefit from its exclusive data asset and technology, solid top-line growth and strong financial profile.

Will the Bull Run Continue?

EverQuote, an operator of online marketplace for insurance shopping in the United States, is poised to gain from the shift to online insurance sales. The business of EverQuote largely depends on revenues from automotive insurance providers. Nonetheless, the company remains focused on rapidly expanding into new verticals. Revenues from non-auto verticals increased at a four-year (2016-2019) CAGR of 127%.

The buyout of Crosspointe Insurance & Financial Services in early September is in tandem with the growth strategy. The acquisition will help the company accelerate growth of health insurance vertical and capitalize on the opportunities in the health insurance market. This apart the acquisition also extends EverQuote’s access to the $130 billion commission TAM component of overall insurance distribution spend shifting online.

EverQuote estimates, post this acquisition, revenue per quote request to increase in its health insurance vertical, allowing diversification of revenues.

Lower advertising costs coupled with growth in revenue per quote request helped the company deliver improved variable marketing margin (“VMM”), one of the primary metrics for managing business. VMM increased 57.4% in the first half of 2020.

The company estimates third-quarter revenues to be in the range of $84 million to $86 million, indicating year-over-year increase of 27% at the mid-point. Variable marketing margin is expected between $26.5 million and $28 million, indicating year-over-year increase of 30% at the mid-point while adjusted EBITDA in projected in the range of $4 million to $4.5 million, implying year-over-year improvement of 15% at the midpoint.

Given solid first-half performance, EverQuote also upped its 2020 revenue expectation to a range of $331 million to $336 million, which increased from the previously mentioned $318 million to $327 million. Variable margin is estimated to be between $101 million and $104.5 million, up from the prior guidance of $96 million to $102 million. Adjusted EBITDA is now expected to be in the range of $15 million to $17.5 million compared with the prior expectation of $12.5 million to $15 million.

The company has an impressive Growth Score of A. This style score analyzes the growth prospects of a company.

The company also boasts a debt free balance sheet with cash balance improving over the last three years.

It currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked companies in the insurance industry are Assurant Inc. (AIZ - Free Report) , James River Group Holdings Ltd (JRVR - Free Report) and Old Republic International Corporation (ORI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Assurant delivered earnings surprise of 23.32% in the last-reported quarter.

James River Group delivered earnings surprise of 33.33% in the last-reported quarter.

Old Republic International delivered earnings surprise of 20.00% in the last-reported quarter.

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