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Health Insurance (HIIQ) Soars Past 80% in a Year: Here's Why

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That Health Insurance Innovations, Inc. (HIIQ - Free Report) stock is favored by investors, is corroborated by its agreeable share price movement. Shares of the company have soared 80.6% in a year, outperforming its industry's increase of only 3.8% and the S&P 500 index’s rally of 14.5%. With a market capitalization of $478 million, average volume of shares traded in the last three months was 0.4 million.


 

Reasons Behind the Rally

The company delivered a positive earnings surprise in the last four quarters with an average beat of 19.14%.

Improving revenues and effective cost control have helped the company deliver a solid 2017. The bottom line grew 36% year over year and outperformed expectations. Policies in force registered a record figure of 0.4 million policies at 2017 end, a 30% increase over the tally in 2016.

Return on equity is a profitability measure, identifying how the company can effectively utilize its shareholders’ money. The company’s ROE expanded 420 basis points year over year to 21.3% in 2017.

Health Insurance Innovations boasts a solid debt free balance sheet with cash in hand more than doubled year over year to $54.3 million at 2017 end. Cash flow from operations has risen 55.7% to $25 million in 2017.

Banking on operational strength, revenues in 2018 are estimated in the range of $290-$300 million, representing a 15-20% appreciation over the figure recorded in 2017. Adjusted EBITDA is expected between $54 million and $57 million, reflecting 20-25% year-over-year growth.  Adjusted earnings per share are thus anticipated between $2.45 and $2.55.

Lower tax rate due to the overhaul in tax policy, which slashed the rate to 21% from 35%, might lend an additional boost to the bottom line. The company expects this decreased tax rate to favorably impact its earnings by 45 cents in 2018.

The Zacks Consensus Estimate for earnings and revenues translates into a year-over-year improvement of 46.7% and 16.7% for 2018.

Health Insurance Innovations’ operating leverage from technology platform is likely to boost its revenues and the cost-control initiatives to favor the company’s margin expansion. Net margin in 2017 expanded 470 basis points.

The Department of Health and Human Services of the US government proposed a rule in February 2018 that would change maximum duration of short-term medical policies to less than one year from the present duration of less than three months.  Also the suggested rule allows more affordable health insurance option. The company expects to gain from the regulatory tailwind.

Health Insurance Innovations carries a Zacks Rank #2 (Buy). With optimism surrounding the stock’s healthy performance, the Zacks Consensus Estimate for 2018 and 2019 has been revised about 22.2% and 16.1% upward, respectively, in the last 60 days.

Other Stocks to Consider

Investors interested in property and casualty industry can also check out other top-ranked stocks like American Equity Investment Life Holding Company (AEL - Free Report) , Everest Re Group, Ltd. (RE - Free Report) and Heritage Insurance Holdings, Inc. (HRTG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

American Equity Investment provides life insurance products and services in the United States. It came up with an average four-quarter beat of 27.23%.

Everest Re provides reinsurance and insurance products. It pulled off an average four-quarter positive earnings surprise of 10.86%.

Heritage Insurance provides personal and commercial residential insurance products. It delivered an average four-quarter beat of 14.66%.

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