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Trupanion (TRUP) Rallies 27% in a Year: More Upside Left?
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Trupanion’s (TRUP - Free Report) shares have gained 26.7% in a year, outperforming the industry’s increase of 24.3%, the Finance sector’s rise of 21.1% and the Zacks S&P 500 composite’s increase of 25.5% in the said time frame. With a market capitalization of 1.2 billion, the average volume of shares traded in the last three months was 0.7 million.
Focus on pet health and well-being in an underpenetrated pet insurance market, product launches, extended operating boundaries and a solid capital position continue to drive this Zacks Rank #3 (Hold) pet insurer. It delivered positive surprises in the last four reported quarters.
This provider of insurance for cats and dogs operates in a large but underpenetrated market. Management noted that less than 5% of the pets are insured in North America and a very low number across most of Europe. There is immense scope as there has been a change in the attitude of pet owners, who are increasingly focusing on pet health and well-being. TRUP is poised well for growth in a total addressable market worth $34.1 billion. The insurer envisions doubling its addressable market (defined by the number of veterinary hospitals) by the end of 2030.
Average monthly retention continues to remain strong, ensuring uninterrupted revenue generation. The insurer has also been expanding globally as part of its five-year growth plan, apart from strengthening its compelling portfolio. TRUP noticed increasing contributions from European endeavors, which added about 14,400 new pets during 2023.
Its focus on introducing products bodes well for growth. Its portfolio of products comprising Chewy and Aflac, medium and low average monthly revenue per unit (ARPu) products Firkin and Phi Direct and products in continental Europe contributed 22% growth to gross new pet adds in the first quarter of 2024.
Over the long term, TRUP remains focused on growing adjusted operating income and deploying increasing amounts at high internal rates of return. The pet insurer’s five-year plan includes a 15% adjusted operating margin.
TRUP projects revenues in the range of $1.2 billion to $1.3 billion, up 14% from the 2023 level. Subscription revenues are projected between $842 million and $862 million, up 20% from 2023. Total adjusted operating income is now expected to be in the range of $100 million to $120 million, up 32% year over year.
A solid balance sheet supports investment in new product development and international expansion. Trupanion expects these investments to extend moat and expand the addressable market in the long run.
The Zacks Consensus Estimate for 2024 earnings indicates an improvement of 57.1% on 13.8% higher revenues. The consensus estimate for 2025 earnings indicates an improvement of 95.5% on 6.8% higher revenues. The expected long-term earnings growth rate is pegged at 39.3%, better than the industry average of 17.1%. It has a Growth Score of A.
HCI Group earnings surpassed estimates in each of the last four quarters, the average beat being 139.15%. In the past year, HCI has rallied 76.6%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies 57.6% and 4.3% year-over-year growth, respectively.
Palomar’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 15.10%. In the past year, PLMR’s stock has surged 53.4%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings indicates 25.8% and 16.1% year-over-year growth, respectively.
ProAssurance earnings surpassed estimates in two of the last four quarters and missed in the other two. In the past year, PRA’s stock has risen 10.9%.
The Zacks Consensus Estimate for PRA’s 2024 and 2025 earnings suggests 371.4% and 71.6% year-over-year growth, respectively.
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Trupanion (TRUP) Rallies 27% in a Year: More Upside Left?
Trupanion’s (TRUP - Free Report) shares have gained 26.7% in a year, outperforming the industry’s increase of 24.3%, the Finance sector’s rise of 21.1% and the Zacks S&P 500 composite’s increase of 25.5% in the said time frame. With a market capitalization of 1.2 billion, the average volume of shares traded in the last three months was 0.7 million.
Focus on pet health and well-being in an underpenetrated pet insurance market, product launches, extended operating boundaries and a solid capital position continue to drive this Zacks Rank #3 (Hold) pet insurer. It delivered positive surprises in the last four reported quarters.
It has a VGM Score of B.
Image Source: Zacks Investment Research
Can TRUP Retain the Momentum?
This provider of insurance for cats and dogs operates in a large but underpenetrated market. Management noted that less than 5% of the pets are insured in North America and a very low number across most of Europe. There is immense scope as there has been a change in the attitude of pet owners, who are increasingly focusing on pet health and well-being. TRUP is poised well for growth in a total addressable market worth $34.1 billion. The insurer envisions doubling its addressable market (defined by the number of veterinary hospitals) by the end of 2030.
Average monthly retention continues to remain strong, ensuring uninterrupted revenue generation. The insurer has also been expanding globally as part of its five-year growth plan, apart from strengthening its compelling portfolio. TRUP noticed increasing contributions from European endeavors, which added about 14,400 new pets during 2023.
Its focus on introducing products bodes well for growth. Its portfolio of products comprising Chewy and Aflac, medium and low average monthly revenue per unit (ARPu) products Firkin and Phi Direct and products in continental Europe contributed 22% growth to gross new pet adds in the first quarter of 2024.
Over the long term, TRUP remains focused on growing adjusted operating income and deploying increasing amounts at high internal rates of return. The pet insurer’s five-year plan includes a 15% adjusted operating margin.
TRUP projects revenues in the range of $1.2 billion to $1.3 billion, up 14% from the 2023 level. Subscription revenues are projected between $842 million and $862 million, up 20% from 2023. Total adjusted operating income is now expected to be in the range of $100 million to $120 million, up 32% year over year.
A solid balance sheet supports investment in new product development and international expansion. Trupanion expects these investments to extend moat and expand the addressable market in the long run.
The Zacks Consensus Estimate for 2024 earnings indicates an improvement of 57.1% on 13.8% higher revenues. The consensus estimate for 2025 earnings indicates an improvement of 95.5% on 6.8% higher revenues. The expected long-term earnings growth rate is pegged at 39.3%, better than the industry average of 17.1%. It has a Growth Score of A.
Stocks to Consider
Some top-ranked stocks from the insurance industry are HCI Group, Inc. (HCI - Free Report) , Palomar Holdings (PLMR - Free Report) and ProAssurance (PRA - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group earnings surpassed estimates in each of the last four quarters, the average beat being 139.15%. In the past year, HCI has rallied 76.6%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies 57.6% and 4.3% year-over-year growth, respectively.
Palomar’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 15.10%. In the past year, PLMR’s stock has surged 53.4%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings indicates 25.8% and 16.1% year-over-year growth, respectively.
ProAssurance earnings surpassed estimates in two of the last four quarters and missed in the other two. In the past year, PRA’s stock has risen 10.9%.
The Zacks Consensus Estimate for PRA’s 2024 and 2025 earnings suggests 371.4% and 71.6% year-over-year growth, respectively.