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EverQuote Gains 52% YTD: Can the Stock Retain the Momentum?

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EverQuote Inc. (EVER - Free Report) shares have gained 52.3% year to date against the industry's decline of 25.8% and the Zacks S&P 500 composite’s decrease of 5.7%. With market capitalization of $2.9 billion, average volume of shares traded in the last three months was 0.5 million.



The company continues to benefit from its exclusive data asset and technology, solid top-line growth and strong financial profile. The company delivered positive earnings surprise in each of the last six reported quarters with the average beat being 36.36%.

What’s Driving It?

EverQuote, an operator of online marketplace for insurance shopping in the United States, expects to benefit from the shift to online insurance sales as the need for social distancing has increased due to the coronavirus pandemic. The company operates through proprietary distributed data platform and extensive use of cloud-based services for products and systems. EverQuote is benefiting from fewer claims being filed in its auto and home insurance business.

EverQuote remains focused on rapidly expanding into new verticals. Revenues from non-auto verticals increased at a four-year (2016-2019) CAGR of 127%.

Lower advertising costs coupled with growth in revenue per quote request helped the company deliver improved variable marketing margin (“VMM”), one of the primary metrics for managing business. VMM witnessed six-year (2014-2019) CAGR of 44%.

The company estimates second-quarter revenues to be in the range of $77 million to $80 million, indicating year-over-year increase of 41% at the mid-point. Variable marketing margin is expected between $23.5 million and $25 million, indicating year-over-year increase of 45% at the mid-point while adjusted EBITDA in projected in the range of $3 million to $4.3 million, implying year-over-year improvement of more than 100% at the midpoint.

Given solid first-quarter performance, EverQuote also upped its 2020 revenue expectation to a range of $318 million to $327 million from the prior range of $315 million and $325 million. Variable margin is estimated to be between $96 million and $102 million, up from the prior guidance of $92 million to $98 million. Adjusted EBITDA is now expected to be in the range of $12.5 million to $17.5 million compared with the prior expectation of $10 million to $15 million.

The Zacks Consensus Estimate for 2020 earnings indicates 21.4% year-over-year increase on 30.8% higher revenues.

The company also boasts a debt free balance sheet with cash balance improving over the last three years.

It currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Some other top-ranked companies in the insurance industry are James River Group Holdings Ltd (JRVR - Free Report) , Kemper Corporation (KMPR - Free Report) and The Allstate Corporation (ALL - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

James River Group surpassed estimates in three of the last four quarters, with the average positive surprise being 7.31%.

Kemper surpassed estimates in the last four quarters, with the average positive surprise being 16.25%.

Allstate beat estimates in each of the trailing four quarters, with the average positive surprise being 18.45%.

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