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Heritage Insurance Holdings, Inc. (HRTG) Hit a 52 Week High, Can the Run Continue?

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Shares of Heritage Insurance (HRTG - Free Report) have been strong performers lately, with the stock up 55.9% over the past month. The stock hit a new 52-week high of $9.95 in the previous session. Heritage Insurance has gained 50.9% since the start of the year compared to the 6.8% move for the Zacks Finance sector and the 16.7% return for the Zacks Insurance - Property and Casualty industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on March 11, 2024, Heritage Insurance reported EPS of $1.15 versus consensus estimate of $0.45 while it beat the consensus revenue estimate by 1.01%.

For the current fiscal year, Heritage Insurance is expected to post earnings of $1.52 per share on $770.86 million in revenues. This represents a -12.57% change in EPS on a 4.81% change in revenues. For the next fiscal year, the company is expected to earn $1.77 per share on $812.82 million in revenues. This represents a year-over-year change of 16.34% and 5.44%, respectively.

Valuation Metrics

Heritage Insurance may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Heritage Insurance has a Value Score of B. The stock's Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 6.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 13.5X. On a trailing cash flow basis, the stock currently trades at 7.3X versus its peer group's average of 14.1X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Heritage Insurance currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Heritage Insurance fits the bill. Thus, it seems as though Heritage Insurance shares could have a bit more room to run in the near term.

How Does HRTG Stack Up to the Competition?

Shares of HRTG have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is HCI Group, Inc. (HCI - Free Report) . HCI has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of B.

Earnings were strong last quarter. HCI Group, Inc. beat our consensus estimate by 128.37%, and for the current fiscal year, HCI is expected to post earnings of $10.22 per share on revenue of $796.64 million.

Shares of HCI Group, Inc. have gained 19.3% over the past month, and currently trade at a forward P/E of 11.14X and a P/CF of 12.18X.

The Insurance - Property and Casualty industry is in the top 14% of all the industries we have in our universe, so it looks like there are some nice tailwinds for HRTG and HCI, even beyond their own solid fundamental situation.

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