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Why Is Palomar (PLMR) Down 5.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for Palomar (PLMR - Free Report) . Shares have lost about 5.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Palomar due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Palomar Holdings, Inc. before we dive into how investors and analysts have reacted as of late.
Palomar Holdings reported fourth-quarter 2025 operating income of $2.24 per share, which beat the Zacks Consensus Estimate by 9%. The bottom line increased 47.4% year over year. Total revenues improved 59.9% year over year to $251 million, mainly due to higher premiums, commission and other income. The top line beat the Zacks Consensus Estimate by 13.1%.
Palomar delivered strong top and bottom-line growth, driven by robust premium expansion, improved underwriting income and higher investment yields. However, the upside was partially offset by higher expenses.
Behind the Headlines
Gross written premiums increased 31.8% year over year to $492.6 million but missed our estimate of $590.6 million. Net earned premiums rose 61.1% year over year to $233.5 million, exceeding our estimate of $197.9 million and the Zacks Consensus Estimate of $205.6 million.
Net investment income climbed 41.3% year over year to $16 million, driven by higher yields on invested assets and a larger average investment balance supported by strong operating cash flow. The figure surpassed both the Zacks Consensus Estimate of $15.3 million and our estimate of $15.9 million.
Palomar reported adjusted underwriting income of $62.3 million, marking a 51.8% increase from the prior-year level. Reported underwriting income rose 55.7% year over year to $54.4 million, exceeding our estimate of $46.5 million.
Total expenses rose 63.1% year over year to $180.7 million, driven by higher losses and loss adjustment expenses, increased acquisition costs, and elevated underwriting expenses. The figure exceeded our estimate of $152.1 million.
The loss ratio was 30.4%, down 470 basis points year over year. However, it was better than our estimate of 37.9% and slightly below the Zacks Consensus Estimate of 31%. The adjusted combined ratio worsened 170 basis points year over year to 73.4%, marginally above the Zacks Consensus Estimate of 73.1%.
Full-Year 2025 Highlights
Palomar reported operating revenues of $876 billion in 2025, representing a 58.2% increase from 2024. This metric surpassed the Zacks Consensus Estimate by 4.9%. Adjusted earnings increased 54.4% year over year to $7.86 per share, driven by higher underwriting income and stronger net investment income. The figure beat the Zacks Consensus Estimate by 2.1%.
Total expenses increased 54.6% to $622.6 million. The adjusted combined ratio improved 100 basis points to 72.7.
Financial Update
Cash and cash equivalents rose 32.9% year over year to $106.9 million. Shareholders’ equity increased 29.3% to $942.7 million over the same period. Annualized adjusted return on equity for 2025 was 25.9%, representing an expansion of 100 basis points year over year. The company did not repurchase any common shares during the quarter. As of Dec. 31, 2025, about $112.7 million remained under its $150 million buyback authorization.
2026 Outlook
Palomar raised its 2026 adjusted net income guidance to $260-$275 million from $210-$215 million. The outlook includes $8-$12 million in expected catastrophe losses.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 10.01% due to these changes.
VGM Scores
At this time, Palomar has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a score of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Palomar has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Palomar (PLMR) Down 5.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Palomar (PLMR - Free Report) . Shares have lost about 5.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Palomar due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Palomar Holdings, Inc. before we dive into how investors and analysts have reacted as of late.
Palomar Q4 Earnings & Revenues Beat Estimates, Premiums Rise Y/Y
Palomar Holdings reported fourth-quarter 2025 operating income of $2.24 per share, which beat the Zacks Consensus Estimate by 9%. The bottom line increased 47.4% year over year. Total revenues improved 59.9% year over year to $251 million, mainly due to higher premiums, commission and other income. The top line beat the Zacks Consensus Estimate by 13.1%.
Palomar delivered strong top and bottom-line growth, driven by robust premium expansion, improved underwriting income and higher investment yields. However, the upside was partially offset by higher expenses.
Behind the Headlines
Gross written premiums increased 31.8% year over year to $492.6 million but missed our estimate of $590.6 million. Net earned premiums rose 61.1% year over year to $233.5 million, exceeding our estimate of $197.9 million and the Zacks Consensus Estimate of $205.6 million.
Net investment income climbed 41.3% year over year to $16 million, driven by higher yields on invested assets and a larger average investment balance supported by strong operating cash flow. The figure surpassed both the Zacks Consensus Estimate of $15.3 million and our estimate of $15.9 million.
Palomar reported adjusted underwriting income of $62.3 million, marking a 51.8% increase from the prior-year level. Reported underwriting income rose 55.7% year over year to $54.4 million, exceeding our estimate of $46.5 million.
Total expenses rose 63.1% year over year to $180.7 million, driven by higher losses and loss adjustment expenses, increased acquisition costs, and elevated underwriting expenses. The figure exceeded our estimate of $152.1 million.
The loss ratio was 30.4%, down 470 basis points year over year. However, it was better than our estimate of 37.9% and slightly below the Zacks Consensus Estimate of 31%. The adjusted combined ratio worsened 170 basis points year over year to 73.4%, marginally above the Zacks Consensus Estimate of 73.1%.
Full-Year 2025 Highlights
Palomar reported operating revenues of $876 billion in 2025, representing a 58.2% increase from 2024. This metric surpassed the Zacks Consensus Estimate by 4.9%. Adjusted earnings increased 54.4% year over year to $7.86 per share, driven by higher underwriting income and stronger net investment income. The figure beat the Zacks Consensus Estimate by 2.1%.
Total expenses increased 54.6% to $622.6 million. The adjusted combined ratio improved 100 basis points to 72.7.
Financial Update
Cash and cash equivalents rose 32.9% year over year to $106.9 million. Shareholders’ equity increased 29.3% to $942.7 million over the same period.
Annualized adjusted return on equity for 2025 was 25.9%, representing an expansion of 100 basis points year over year. The company did not repurchase any common shares during the quarter. As of Dec. 31, 2025, about $112.7 million remained under its $150 million buyback authorization.
2026 Outlook
Palomar raised its 2026 adjusted net income guidance to $260-$275 million from $210-$215 million. The outlook includes $8-$12 million in expected catastrophe losses.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 10.01% due to these changes.
VGM Scores
At this time, Palomar has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a score of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Palomar has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.