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Here's Why You Should Hold EverQuote (EVER) in Your Portfolio

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EverQuote, Inc. (EVER - Free Report) has been gaining momentum on the back of increasing consumer traffic, lower advertising costs and solid capital position.

Growth Projections

The Zacks Consensus Estimate for 2022 earnings per share is pegged at 16 cents, indicating year-over-year increases of 171.3%.

Estimate Revision

The Zacks Consensus Estimate for 2022 surged more than five-fold in the past 60 days, reflecting analysts’ optimism.

Zacks Rank & Price Performance

EverQuote currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 2% compared with the industry’s growth of 49.1%.

Business Tailwinds

Strong performance from automotive insurance providers will continue to drive revenues for the multi-line insurer. This automotive insurance vertical accounts for a lion’s share of the total company’s revenues.

By virtue of increasing consumer traffic, higher quote request volume and innovating advertiser products and services, the top-line of the company is expected to improve going forward.

The Zacks Consensus Estimate for the company’s 2021 and 2022 revenues is pegged at $435.51 million and $521.29 million, indicating year-over-year increase of nearly 25.5% and 19.7%, respectively.

Lower advertising costs coupled with improvements in traffic volumes and monetization, aided the company to deliver improved variable marketing margin (VMM), one of the primary metrics for managing business. For 2020, VMM grew 48% year over year to $108.6 million and as a percentage of revenues, VMM expanded to 31%, up from 30% in the previous year.

The company estimates first-quarter revenues to be in the range of $100 million to $102 million, a year-over-year increase of 24% at the midpoint. VMM is expected between $30.5 million and $31.5 million, a year-over-year increase of 30% at the midpoint while adjusted EBITDA is projected in the range of $4 million to $5 million, implying year-over-year improvement of 18% at the midpoint.

EverQuote also upped its 2021 revenue expectation to a range of $430 million to $440 million, a year-over-year increase of 25% at the midpoint. VMM is estimated to be between $135 million and $140 million, a year-over-year increase of 27% at the midpoint. Adjusted EBITDA is now expected to be in the range of $25 million to $30 million, a year-over-year increase of 49% at the midpoint.

The multi-line insurer’s capital and liquidity position remains strong, with over $42.9 million of cash and cash equivalents. Also, it has access to $25 million revolving credit facility. In 2020, operating cash flow was a positive $10.7 million, which increased more than two-fold year over year.

Stocks to Consider

Some better-ranked stocks in the insurance space are Alleghany (Y - Free Report) , SelectQuote, Inc. (SLQT - Free Report) and James River Group Holdings, Ltd. (JRVR - 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.

Alleghany’s bottom line surpassed estimates in two of the last four quarters and missed in the other two, the average beat being 34.08%.

SelectQuote surpassed estimates in three of the last four quarters, with the average surprise being 121.53%.

James River Group surpassed estimates in three of the last four quarters, with the average surprise being 11.63%.

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