It has been about a month since the last earnings report for Palomar (
PLMR Quick Quote PLMR - Free Report) . Shares have added about 7.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Palomar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Palomar Q1 Earnings Top, Revenues Miss Estimates Palomar Holdings, Inc. reported first-quarter 2023 operating income of 80 cents per share, which beat the Zacks Consensus Estimate by 2.6% and came in line with our estimate. The bottom line increased 17.6% year over year. Palomar witnessed improved premiums and net investment income, partly offset by higher losses and loss adjustment expenses and other underwriting expenses. Behind the Headlines
Total revenues improved 12.2% year over year to $89.1 million, mainly attributable to higher premiums and net investment income. The top line however missed the Zacks Consensus Estimate by 3.1%. Our estimate was $90.3 million.
Gross written premiums increased 46.3% year over year to $250.1 million versus our estimate of $179.4 million. Net earned premiums increased 9.5% year over year to $83.2 million versus our estimate of $86.6 million. Net investment income increased 98.5% year over year to $5.1 million, driven by higher returns on invested assets and a higher average balance of investments. Palomar witnessed an underwriting income of $18.4 million, 2.8% higher than the year-ago income of $17 million. Adjusted underwriting income was $22.2 million, 4.7% higher than the year-ago figure. Total expenses of $66.6 million increased 12.8% year over year due to higher losses and loss adjustment expenses, underwriting expenses and interest expenses. Our estimate was $68.4 million The loss ratio was 24.8, which deteriorated 510 basis points (bps) year over year. Adjusted combined ratio, excluding catastrophe losses, deteriorated 120 bps year over year to 73.3. Financial Update
Cash and cash equivalents increased 17.9% from 2022-end to $80.4 million at first-quarter 2023-end. Shareholder equity increased 5.2% from 2022-end to $404.6 million.
Annualized adjusted return on equity in 2022 was 20.7%, expanding 150 bps year over year. PLMR bought back shares worth $6.8 million in the first quarter of 2023. As of Mar 31, 2023, $58.8 million remained under authorization. 2023 View
Palomar aims to achieve adjusted net income in the range of $86 million to $90 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -6.23% due to these changes.
At this time, Palomar has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Palomar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.