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Why You Should Stay Invested in Palomar Holdings (PLMR)
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Palomar Holdings, Inc. (PLMR - Free Report) is well-poised for growth, driven by strong premium retention rates, new partnerships, rate increases and effective capital deployment.
Growth Projections
The Zacks Consensus Estimate for Palomar’s 2023 earnings is pegged at $3.24, indicating a 16.9% increase from the year-ago reported figure on 17% higher revenues of $391.68 million. The consensus estimate for 2024 earnings is pegged at $3.87, indicating a 19.4% increase from the year-ago reported figure on 19.5% higher revenues of $268.24 million.
Zacks Rank
Palomar currently carries a Zacks Rank #3 (Hold). The stock has gained 18.9% year to date, outperforming the industry's growth of 2.7%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
Palomar’s return on equity is 17.1%, which expanded 310 basis points (bps) year over year. Annualized adjusted ROE expanded 450 bps year over year to 18.3%. ROE reflects its efficiency in using its shareholders’ funds.
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.
Business Tailwinds
Riding on higher premiums, net investment income, commission and other income, Palomar’s top line has been rising over the last several years. Total revenues witnessed a six-year CAGR (2017-2022) of 32.9%. Given its continuous efforts to generate other sources of income, like fee income, which will strengthen its earnings base, PLMR’s revenue growth should continue to increase.
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 and distribution footprint and new partnerships. Rate increases for commercial products are also likely to contribute to the premium growth of the insurer.
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 increase in fixed-income yields should continue to drive the net investment income going forward.
Palomar Excess and Surplus Insurance Company's growth is likely to be driven by its main products, commercial earthquake, commercial all risk and builder’s risk.
For 2023, Palomar Holdings projects to generate adjusted net income in the range of $86 million to $90 million.
A solid liquidity position enables Palomar to enhance shareholder value via share buybacks. The insurer’s growing cash and cash equivalents indicate its 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 property and casualty insurance follows a conservative risk transfer program, which manages exposure to catastrophe events by purchasing reinsurance and risk mitigation strategies.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Kinsale Capital Group, Inc. (KNSL - Free Report) , Everest Re Group, Ltd. and Selective Insurance Group, Inc. (SIGI - Free Report) . While Kinsale Capital sports a Zacks Rank #1 (Strong Buy), Everest Re and Selective Insurance carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. Year to date, KNSL has gained 21.4%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $9.92 and $11.94, indicating a year-over-year increase of 27.1% and 20.4%, respectively.
Everest Re beat estimates in each of the last four quarters, the average being 18.41%.
The Zacks Consensus Estimate for RE’s 2023 and 2024 earnings per share is pegged at $44.28 and $53.54, indicating a year-over-year increase of 63.5% and 20.9%, respectively. Year to date, RE has gained 9.8%.
The Zacks Consensus Estimate for Selective Insurance’s 2023 and 2024 earnings per share is pegged at $6.62 and $7.60, indicating a year-over-year increase of 31.6% and 14.8%, respectively. Year to date, SIGI has gained 9.1%.
The Zacks Consensus Estimate for SIGI’s 2023 and 2024 revenues is pegged at $4.17 billion and $4.60 billion, indicating a year-over-year increase of 13.6% and 10.1%, respectively.
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Why You Should Stay Invested in Palomar Holdings (PLMR)
Palomar Holdings, Inc. (PLMR - Free Report) is well-poised for growth, driven by strong premium retention rates, new partnerships, rate increases and effective capital deployment.
Growth Projections
The Zacks Consensus Estimate for Palomar’s 2023 earnings is pegged at $3.24, indicating a 16.9% increase from the year-ago reported figure on 17% higher revenues of $391.68 million. The consensus estimate for 2024 earnings is pegged at $3.87, indicating a 19.4% increase from the year-ago reported figure on 19.5% higher revenues of $268.24 million.
Zacks Rank
Palomar currently carries a Zacks Rank #3 (Hold). The stock has gained 18.9% year to date, outperforming the industry's growth of 2.7%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
Palomar’s return on equity is 17.1%, which expanded 310 basis points (bps) year over year. Annualized adjusted ROE expanded 450 bps year over year to 18.3%. ROE reflects its efficiency in using its shareholders’ funds.
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.
Business Tailwinds
Riding on higher premiums, net investment income, commission and other income, Palomar’s top line has been rising over the last several years. Total revenues witnessed a six-year CAGR (2017-2022) of 32.9%. Given its continuous efforts to generate other sources of income, like fee income, which will strengthen its earnings base, PLMR’s revenue growth should continue to increase.
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 and distribution footprint and new partnerships. Rate increases for commercial products are also likely to contribute to the premium growth of the insurer.
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 increase in fixed-income yields should continue to drive the net investment income going forward.
Palomar Excess and Surplus Insurance Company's growth is likely to be driven by its main products, commercial earthquake, commercial all risk and builder’s risk.
For 2023, Palomar Holdings projects to generate adjusted net income in the range of $86 million to $90 million.
A solid liquidity position enables Palomar to enhance shareholder value via share buybacks. The insurer’s growing cash and cash equivalents indicate its 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 property and casualty insurance follows a conservative risk transfer program, which manages exposure to catastrophe events by purchasing reinsurance and risk mitigation strategies.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Kinsale Capital Group, Inc. (KNSL - Free Report) , Everest Re Group, Ltd. and Selective Insurance Group, Inc. (SIGI - Free Report) . While Kinsale Capital sports a Zacks Rank #1 (Strong Buy), Everest Re and Selective Insurance carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. Year to date, KNSL has gained 21.4%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $9.92 and $11.94, indicating a year-over-year increase of 27.1% and 20.4%, respectively.
Everest Re beat estimates in each of the last four quarters, the average being 18.41%.
The Zacks Consensus Estimate for RE’s 2023 and 2024 earnings per share is pegged at $44.28 and $53.54, indicating a year-over-year increase of 63.5% and 20.9%, respectively. Year to date, RE has gained 9.8%.
The Zacks Consensus Estimate for Selective Insurance’s 2023 and 2024 earnings per share is pegged at $6.62 and $7.60, indicating a year-over-year increase of 31.6% and 14.8%, respectively. Year to date, SIGI has gained 9.1%.
The Zacks Consensus Estimate for SIGI’s 2023 and 2024 revenues is pegged at $4.17 billion and $4.60 billion, indicating a year-over-year increase of 13.6% and 10.1%, respectively.