Heritage Insurance (HRTG Quick QuoteHRTG - Free Report) is expected to witness an improvement in its top line but a decline in its bottom line when it reports first-quarter 2025 results on May 6. 

The Zacks Consensus Estimate for HRTG’s first-quarter revenues is pegged at $213.7 million, indicating an 11.7% increase from the year-ago reported figure.

The consensus estimate for earnings is pegged at 46 cents per share. The Zacks Consensus Estimate for HRTG’s first-quarter earnings has witnessed no movement in the past 30 days. The estimate suggests a year-over-year decrease of 2.1%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

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HRTG’s Decent Earnings Surprise History

HRTG’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing in one, the average surprise being 328.63%.

What the Zacks Model Unveils for HRTG 

Our proven model does not conclusively predict an earnings beat for Heritage Insurance this time around. This is because a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), which increases the chances of an earnings beat. This is not the case, as you can see below.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: HRTG has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 46 cents.

Zacks Rank: HRTG currently has a Zacks Rank #1. 

You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Shape HRTG Q1 Results

Heritage Insurance’s first-quarter results are likely to benefit from rate adequacy, managed exposures and enhanced underwriting discipline. 

Gross premiums earned are likely to have improved, driven by rate adequacy and organic growth in commercial, residential and surplus lines business.  

Net investment income is likely to have benefited from a high-quality portfolio of short-duration assets. The Zacks Consensus Estimate is pegged at $8.8 million.

Total revenues are likely to have increased, driven by an increase in premiums and net investment income.

Strategically lowering exposures in over-concentrated and unprofitable areas, while increasing presence in profitable geographies and products, has likely driven profitability.

A reinsurance program banking on prudent exposure management initiatives is likely to have aided the company in managing catastrophe losses.   

A likely increase in higher policy acquisition costs and general and administrative expenses is expected to have driven the net expense ratio higher. The Zacks Consensus Estimate for net expense ratio is pegged at 34.9.

Combined ratio is likely to have deteriorated, attributed to a higher loss ratio and expense ratio. The Zacks Consensus Estimate for combined ratio is pegged at 97.

HRTG’s Price Performance & Valuation

The stock outperformed the industry, sector and the S&P 500 in the first quarter of 2025.

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The stock is trading at a price-to-book value of 2.12X, slightly higher than the industry’s 1.66X.

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Shares of other insurers like NMI Holdings (NMIH Quick QuoteNMIH - Free Report) , MGIC Investment Corporation (MTG Quick QuoteMTG - Free Report) and Radian Group (RDN Quick QuoteRDN - Free Report) are trading at a multiple lower than the industry average.

Investment Thesis

Heritage Insurance has identified the Excess and Surplus (E&S) lines as a strategic growth driver and is actively pursuing expansion into additional states to capitalize on this opportunity.

As part of its profitability-focused strategy, Heritage Insurance has discontinued writing new personal lines policies in Florida and the Northeast, given declining returns and a challenging reinsurance environment. While this shift has led to a reduction in policy count, it has been offset by an increase in average premiums per policy, reflecting its emphasis on disciplined, high-quality underwriting.

Heritage Insurance maintains a comprehensive reinsurance program that significantly limits its exposure to hurricanes and other severe coastal weather events. Management expects a meaningful decline in the ceded premium ratio going forward, supported by a more efficient and cost-effective reinsurance structure and continued growth in gross premiums earned.

In line with its commitment to long-term value creation, the company is reallocating capital to technology initiatives and higher-margin segments with stronger profit potential. Additionally, to enhance shareholder returns, HRTG has a $10 million share repurchase program in place for 2025.

What Should Investors Do Now With HRTG Stock?

Heritage Insurance is strongly positioned for future growth, driven by the ongoing expansion of its commercial residential portfolio, accelerating progress in the E&S segment, improved pricing dynamics, rising revenues, margin expansion and solid earnings. Strategic focus on diversification is yielding tangible benefits, leading to more balanced risk exposure, favorable claims trends and reduced reinsurance expenses.

The geographic spread of its portfolio remains well-balanced, with no single state representing more than 26.7% of its total insurable value. A VGM Score of A instills confidence in the stock.

Thus, despite a premium valuation, it is worth adding HRTG stock to one’s portfolio.