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Reasons Why Investors Should Retain EverQuote (EVER) Stock
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EverQuote, Inc. (EVER - Free Report) has been gaining momentum on the back of a higher volume of quote requests, strategic acquisitions and lower advertising costs.
Zacks Rank & Price Performance
EverQuote currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 55.1% compared with the industry’s growth of 31.9%.
Image Source: Zacks Investment Research
Style Score
The company 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.
Business Tailwinds
The top-line growth of the multi-line insurer is likely to gain from solid performance of automotive insurance providers that account for the lion’s share of the revenues.
Higher demand for consumer referrals by insurance providers and an increase in the volume of quote requests are expected to drive revenue per quote request.
Lower advertising costs coupled with improvements in traffic volumes and monetization, aided the company to deliver improved variable marketing margin, one of the primary metrics for managing the business.
EverQuote witnessed impressive inorganic growth. In August 2021, it acquired PolicyFuel, LLC and its affiliated entities, which is expected to widen the range of its products offerings and support its property and casualty carrier partners. The buyout further enhances the personalized shopping experiences offered to consumers. It has also increased EverQuote’s ability to access the $135 billion commission TAM component of overall insurance distribution spending shifting online.
In September 2020, EverQuote acquired Crosspointe Insurance & Financial Services, LLC, which is expected to accelerate the extension of EverQuote’s digital distribution platform to a direct-to-consumer agency model within the health vertical. The transaction is also expected to increase revenue per quote request in the health insurance vertical, which will further grow and diversify revenue stream.
Upbeat Guidance
The company estimates third-quarter revenues to be in the range of $109 million to $111 million, indicating a year-over-year increase of 22% at the mid-point. Variable marketing margin is expected between $33 million and $34 million, indicating a year-over-year increase of 14% at the mid-point while adjusted EBITDA in projected in the range of $4.5 million to $5.5 million.
Given the solid first-half performance, EverQuote also upped its 2021 revenue expectation to a range of $440 million to $446 million, indicating a year-over-year increase of 28% at the mid-point and an increase from the earlier guidance of $434 - $442 million. Variable margin is estimated to be between $138 million and $141 million, up from the prior guidance of $136 million to $140 million and implying a year-over-year increase of 28% at the mid-point. Adjusted EBITDA is now expected to be in the range of $23 million to $26 million, indicating a year-over-year increase of 33% at the mid-point.
Strong Capital Position
The multi-line insurer’s capital and liquidity position remains strong, with over $54.5 million of cash and cash equivalents. Also, it has access to a $25 million revolving credit facility. In the first half of 2021, operating cash flow was a positive $11.2 million, which increased 42.1% year over year. The robust capital position supports EverQuote in its growth initiatives.
Image: Bigstock
Reasons Why Investors Should Retain EverQuote (EVER) Stock
EverQuote, Inc. (EVER - Free Report) has been gaining momentum on the back of a higher volume of quote requests, strategic acquisitions and lower advertising costs.
Zacks Rank & Price Performance
EverQuote currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 55.1% compared with the industry’s growth of 31.9%.
Style Score
The company 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.
Business Tailwinds
The top-line growth of the multi-line insurer is likely to gain from solid performance of automotive insurance providers that account for the lion’s share of the revenues.
Higher demand for consumer referrals by insurance providers and an increase in the volume of quote requests are expected to drive revenue per quote request.
Lower advertising costs coupled with improvements in traffic volumes and monetization, aided the company to deliver improved variable marketing margin, one of the primary metrics for managing the business.
EverQuote witnessed impressive inorganic growth. In August 2021, it acquired PolicyFuel, LLC and its affiliated entities, which is expected to widen the range of its products offerings and support its property and casualty carrier partners. The buyout further enhances the personalized shopping experiences offered to consumers. It has also increased EverQuote’s ability to access the $135 billion commission TAM component of overall insurance distribution spending shifting online.
In September 2020, EverQuote acquired Crosspointe Insurance & Financial Services, LLC, which is expected to accelerate the extension of EverQuote’s digital distribution platform to a direct-to-consumer agency model within the health vertical. The transaction is also expected to increase revenue per quote request in the health insurance vertical, which will further grow and diversify revenue stream.
Upbeat Guidance
The company estimates third-quarter revenues to be in the range of $109 million to $111 million, indicating a year-over-year increase of 22% at the mid-point. Variable marketing margin is expected between $33 million and $34 million, indicating a year-over-year increase of 14% at the mid-point while adjusted EBITDA in projected in the range of $4.5 million to $5.5 million.
Given the solid first-half performance, EverQuote also upped its 2021 revenue expectation to a range of $440 million to $446 million, indicating a year-over-year increase of 28% at the mid-point and an increase from the earlier guidance of $434 - $442 million. Variable margin is estimated to be between $138 million and $141 million, up from the prior guidance of $136 million to $140 million and implying a year-over-year increase of 28% at the mid-point. Adjusted EBITDA is now expected to be in the range of $23 million to $26 million, indicating a year-over-year increase of 33% at the mid-point.
Strong Capital Position
The multi-line insurer’s capital and liquidity position remains strong, with over $54.5 million of cash and cash equivalents. Also, it has access to a $25 million revolving credit facility. In the first half of 2021, operating cash flow was a positive $11.2 million, which increased 42.1% year over year. The robust capital position supports EverQuote in its growth initiatives.
Stocks to Consider
Some better-ranked stocks in the insurance space are CNO Financial Group, Inc. (CNO - Free Report) , American Financial Group, Inc. (AFG - Free Report) and MetLife, Inc. (MET - Free Report) . While CNO Financial and American Financial sport a Zacks Rank #1 (Strong Buy), MetLife carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CNO Financial’s bottom line surpassed estimates in three of the last four quarters and missed in one, the average beat being 26.12%.
American Financial surpassed estimates in each of the last four quarters, with the average surprise being 52.82%.
MetLife surpassed estimates in each of the last four quarters, with the average surprise being 33.35%.