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Here's Why You Should Hold on to Trupanion (TRUP) Stock Now

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Trupanion Inc. (TRUP - Free Report) is well-poised to grow, courtesy of a heightened focus on pets’ health and well-being in an underpenetrated pet insurance market, product launches, extended operating boundaries and a solid capital position.

Zacks Rank & Price Performance

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

Year to date, the stock has lost 32.2% against the industry’s growth of 9%.

Zacks Investment Research
Image Source: Zacks Investment Research

Growth Projections

The Zacks Consensus Estimate for 2023 earnings indicates an improvement of 32.9% from the year-ago reported figure on 21.4% higher revenues.

The stock carries a favorable Growth Score of B. This style score analyzes the growth prospects of the company.

Business Tailwinds

This pet insurer operates in a large but underpenetrated market. With a change in the attitude of pet owners who are increasingly focusing on pets’ health and well-being, TRUP — a provider of insurance for cats and dogs — is poised well for growth in a total addressable market worth $34.1 billion.

The average pet now stays with Trupanion for 79 months, up from 78 months in the year-ago period. This, in turn, ensures consistent revenue generation. The higher retention rates are indicative of the customers’ fondness for TRUP’s products.  Apart from expanding globally by entering Japan and Europe, TRUP has launched low and medium ARPU products, Furkin and pet health insurance direct in Canada to strengthen its market presence.

Monthly average revenue per pet was $63.89 in 2021, up 3% year over year. The figure was higher than the cost of veterinary invoices, which increased by 1.9%.

Trupanion remains focused on growing its addressable market by 40% by 2025 end by adding 10,000 international hospitals. This will increase its overall market from 25,000 in North America to 35,000 globally. While doing so, it anticipates expanding its active hospital base.

Strategic investment by Aflac bodes well. TRUP stated Aflac integrated with Trupanion employee benefits products will be made available to select Aflac brokers for selling to work sites across North America.

A solid balance sheet supports investment in new product development and international expansion. Trupanion expects these investments to extend moat and expand the addressable market in the long run.

Trupanion boasts of being the only company in the S&P 600 to deliver revenue growth in excess of 20% per year for every year over the past decade.

Upbeat Guidance

TRUP anticipates achieving 25% growth in subscription-adjusted operating income in 2022.

TRUP believes that if it can reach its five-year target, its revenues may grow to more than $1.5 billion. It may reach over 3.5 million pets and deliver growth in the intrinsic value of over 25% per year.

Stocks to Consider

Some better-ranked stocks from the insurance space include Horace Mann Educators Corporation (HMN - Free Report) , Old Republic International Corporation
(ORI - Free Report) and American Financial Group (AFG - 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 .

The Zacks Consensus Estimate for Horace Mann Educators’ 2022 earnings stands at $3.63 on revenues of $1.4 billion. Horace Mann has a trailing four-quarter earnings surprise of 22.80%, on average.

The Zacks Consensus Estimate for 2022 Old Republic International’s earnings has moved up by a dime in the past 60 days. ORI has a trailing four-quarter earnings surprise of 38.74%, on average.

The Zacks Consensus Estimate for American Financial’s 2022 earnings has moved up 3.3% higher in the past 60 days. AFG has a trailing four-quarter earnings surprise of 39.58%, on average.

Shares of ORI, and AFG have rallied 20.4% and 29.7%, respectively, in a year while that of HMN lost 3.4% in the same time frame.