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PLMR Stock Outperforms Industry: What Should Investors Do Now?
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Key Takeaways
PLMR-FRONT adds a fee-based revenue stream, strengthening Palomar's earnings foundation over the medium term.
Palomar sees premium growth from higher policy volumes, strong retention and expanded partnerships.
PLMR expects higher investment income and stable earnings from reinsurance use and a debt-free balance sheet.
Shares of Palomar Holdings, Inc. (PLMR - Free Report) have gained 29.3% in the past year, outperforming its industry, the Finance sector and the Zacks S&P 500 composite’s growth of 8.7%, 17.2% and 16.8%, respectively.
Palomar Holdings has outperformed its peers, The Travelers Companies, Inc. (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and AXIS Capital Holdings Limited (AXS - Free Report) , which have risen 20.5%, 19.3% and 20.3%, respectively, in the past year.
Image Source: Zacks Investment Research
The insurer has a market capitalization of $3.64 billion. The average volume of shares traded in the last three months was 0.2 million. Palomar Holdings beat earnings estimates in each of the past four quarters, with an average surprise of 17.65%.
PLMR Trading Above 50-Day and 200-Day Moving Averages
The stock is trading above the 50-day and 200-day simple moving averages (SMA) of $122.22 and $134.23, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Image Source: Zacks Investment Research
PLMR’s Encouraging Growth Projection
The Zacks Consensus Estimate for Palomar Holdings’ 2025 earnings per share indicates a year-over-year increase of 51.2%. The consensus estimate for revenues is pegged at $835.13 million, implying a year-over-year improvement of 52%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 12% and 28.7%, respectively, from the corresponding 2025 estimates.
Optimist Analyst Sentiment on PLMR
Each of the five analysts covering the stock has raised estimates for 2025 and 2026 over the past 60 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has moved up 5.6% and 2.5%, respectively, in the past 60 days.
Average Target Price for PLMR Suggests Upside
Based on short-term price targets offered by six analysts, the Zacks average price target is $156.17 per share. The average suggests a potential 13.7% upside from the last closing price.
Image Source: Zacks Investment Research
PLMR’s Return on Capital
Return on equity is a measure of profitability reflecting how efficiently the company is utilizing its shareholders’ equity. Return on equity of 24.2% compared favorably with the industry’s average of 8%.
Also, the return on invested capital in the trailing 12 months was 21%, better than the industry average of 6.1%, reflecting the company’s efficiency in utilizing funds to generate income.
Factors Driving PLMR
Palomar’s fee-based platform, PLMR-FRONT, is positioned to drive medium-term growth. The addition of this revenue stream is expected to strengthen its earnings foundation.
The increasing volume of policies across multiple business lines, strong retention rates, expansion into new geographic areas and distribution channels, and the formation of new partnerships are expected to drive premiums.
PLMR identifies Surety as an attractive, long-term growth opportunity. Like crop insurance, Surety is not correlated with the traditional property and casualty insurance cycle, offering diversification and stability.
Net investment income is expected to rise, supported by a high-quality fixed-income portfolio, higher average investment balances, and improved yields. This solid investment base is poised to generate strong returns.
Palomar Holdings’ risk transfer strategy reduces exposure to major catastrophic events, helping to stabilize earnings and improve its combined ratio.
Financially, the insurer maintains a strong capital position and a debt-free balance sheet. As part of its shareholder return initiatives, Palomar Holdings continues to execute share buybacks.
With these strengths in place, Palomar Holdings expects 2025 adjusted net income of $210 million to $215 million.
End Notes
Palomar Holdings is positioning itself as a key player in the crop insurance sector, with its growing emphasis on Surety signaling strong prospects for future expansion. The company’s diverse product suite, ongoing geographic growth, onboarding of new producers, strategic partnerships with other insurers, and implemented rate increases are all poised to fuel its momentum.
As a specialty insurer, PLMR leverages reinsurance to effectively mitigate risk exposure. This strategy enables the company to underwrite policies with sufficient coverage while managing potential losses, contributing to a stable and resilient business model. Coupled with the solid growth projections, strong fundamentals and favorable return on capital, as well as optimistic analyst sentiment, the time appears right for potential investors to bet on this Zacks Rank #2 (Buy) insurer. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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PLMR Stock Outperforms Industry: What Should Investors Do Now?
Key Takeaways
Shares of Palomar Holdings, Inc. (PLMR - Free Report) have gained 29.3% in the past year, outperforming its industry, the Finance sector and the Zacks S&P 500 composite’s growth of 8.7%, 17.2% and 16.8%, respectively.
Palomar Holdings has outperformed its peers, The Travelers Companies, Inc. (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and AXIS Capital Holdings Limited (AXS - Free Report) , which have risen 20.5%, 19.3% and 20.3%, respectively, in the past year.
Image Source: Zacks Investment Research
The insurer has a market capitalization of $3.64 billion. The average volume of shares traded in the last three months was 0.2 million.
Palomar Holdings beat earnings estimates in each of the past four quarters, with an average surprise of 17.65%.
PLMR Trading Above 50-Day and 200-Day Moving Averages
The stock is trading above the 50-day and 200-day simple moving averages (SMA) of $122.22 and $134.23, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Image Source: Zacks Investment Research
PLMR’s Encouraging Growth Projection
The Zacks Consensus Estimate for Palomar Holdings’ 2025 earnings per share indicates a year-over-year increase of 51.2%. The consensus estimate for revenues is pegged at $835.13 million, implying a year-over-year improvement of 52%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 12% and 28.7%, respectively, from the corresponding 2025 estimates.
Optimist Analyst Sentiment on PLMR
Each of the five analysts covering the stock has raised estimates for 2025 and 2026 over the past 60 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has moved up 5.6% and 2.5%, respectively, in the past 60 days.
Average Target Price for PLMR Suggests Upside
Based on short-term price targets offered by six analysts, the Zacks average price target is $156.17 per share. The average suggests a potential 13.7% upside from the last closing price.
Image Source: Zacks Investment Research
PLMR’s Return on Capital
Return on equity is a measure of profitability reflecting how efficiently the company is utilizing its shareholders’ equity. Return on equity of 24.2% compared favorably with the industry’s average of 8%.
Also, the return on invested capital in the trailing 12 months was 21%, better than the industry average of 6.1%, reflecting the company’s efficiency in utilizing funds to generate income.
Factors Driving PLMR
Palomar’s fee-based platform, PLMR-FRONT, is positioned to drive medium-term growth. The addition of this revenue stream is expected to strengthen its earnings foundation.
The increasing volume of policies across multiple business lines, strong retention rates, expansion into new geographic areas and distribution channels, and the formation of new partnerships are expected to drive premiums.
PLMR identifies Surety as an attractive, long-term growth opportunity. Like crop insurance, Surety is not correlated with the traditional property and casualty insurance cycle, offering diversification and stability.
Net investment income is expected to rise, supported by a high-quality fixed-income portfolio, higher average investment balances, and improved yields. This solid investment base is poised to generate strong returns.
Palomar Holdings’ risk transfer strategy reduces exposure to major catastrophic events, helping to stabilize earnings and improve its combined ratio.
Financially, the insurer maintains a strong capital position and a debt-free balance sheet. As part of its shareholder return initiatives, Palomar Holdings continues to execute share buybacks.
With these strengths in place, Palomar Holdings expects 2025 adjusted net income of $210 million to $215 million.
End Notes
Palomar Holdings is positioning itself as a key player in the crop insurance sector, with its growing emphasis on Surety signaling strong prospects for future expansion. The company’s diverse product suite, ongoing geographic growth, onboarding of new producers, strategic partnerships with other insurers, and implemented rate increases are all poised to fuel its momentum.
As a specialty insurer, PLMR leverages reinsurance to effectively mitigate risk exposure. This strategy enables the company to underwrite policies with sufficient coverage while managing potential losses, contributing to a stable and resilient business model. Coupled with the solid growth projections, strong fundamentals and favorable return on capital, as well as optimistic analyst sentiment, the time appears right for potential investors to bet on this Zacks Rank #2 (Buy) insurer. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.