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Palomar Holdings Stock Surges 91% in a Year: More Room for Growth?
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Palomar Holdings, Inc.’s (PLMR - Free Report) shares have surged 91% in a year compared with the industry's growth of 28.7%. The Finance sector and the Zacks S&P 500 composite have returned 26.7% and 24.4%, respectively, in the same time frame. With a market capitalization of $2.55 billion, the average volume of shares traded in the last three months was 0.17 million.
PLMR Outperforms Industry, Sector, S&P 500
Image Source: Zacks Investment Research
New business, strong retention rates, strategic expansion of products’ geographic and distribution footprint, new partnerships and high-quality fixed-income securities continue to drive this Zacks Rank #1 (Strong Buy) property and casualty insurer.
PLMR Witnessing Northbound Estimate Revision
The Zacks Consensus Estimate for Palomar Holdings’ 2024 and 2025 earnings has moved 4.1% and 7.6% north, respectively, in the past 30 days, reflecting analyst optimism.
PLMR’s Growth Projection Encourages
The Zacks Consensus Estimate for Palomar Holdings’ 2024 earnings per share indicates a year-over-year increase of 30.8%. The consensus estimate for revenues is pegged at $527.72 million, implying a year-over-year improvement of 41.4%.
The consensus estimate for 2025 earnings per share and revenues indicates a year-over-year increase of 19.8% and 24.2%, respectively, from the corresponding 2024 estimates.
PLMR’s Return on Capital
Return on equity (ROE) is a measure of profitability reflecting how efficiently the company is utilizing its shareholders’ value. ROE was 20.8% in the first half of 2024, which compared favorably with the industry’s average of 7.9% and expanded 370 basis points year over year. Annualized adjusted return on equity expanded 260 basis points year over year to 23.8% in the first half of 2024. Also, the return on invested capital in the trailing 12 months was 19.2%, better than the industry average of 6%, reflecting the company’s efficiency in utilizing funds to generate income.
Factors Acting in Favor of PLMR
Premiums, which are the principal component of an insurer’s top line, should continue to benefit from the increased volume of policies written across the lines of business. New business generated, strong retention rates, strategic expansion of products’ geographic and distribution footprint and new partnerships should help in retaining the momentum.
High-quality fixed-income securities, a higher average balance of investments and an increase in fixed-income yields favor improvement in net investment income, which witnessed a five-year CAGR (2018-2023) of 49%.
Palomar Holdings’ fee-generating PLMR-FRONT should fuel growth in the medium term. The addition of the fee-based revenue stream to the business is expected to strengthen its earnings base.
The company’s prudent underwriting expertise is reflected in its combined ratio, which has been under 95% since 2017, except in 2020. PLMR’s risk transfer strategy lowers exposure to major events, which, in turn, reduces earnings volatility.
Palomar Holdings has a debt-free balance sheet. Continued operational excellence also helps it maintain a strong capital position. PLMR expects to generate adjusted net income between $124 million and $130 million in 2024.
NMI Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 10.15%. Shares of NMIH have jumped 41.9% in the past year. The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 16.9% and 5.2%, respectively.
RLI’s earnings surpassed estimates in each of the last four quarters, the average surprise being 140.08%. Shares of RLI have gained 17% in the past year. The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings implies year-over-year growth of 23.8% and 2.5%, respectively.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 28.93%. Shares of ACGL have jumped 44% in the past year. The Zacks Consensus Estimate for ACGL’s 2024 and 2025 earnings implies year-over-year growth of 6.6% and 2.4%, respectively.
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Palomar Holdings Stock Surges 91% in a Year: More Room for Growth?
Palomar Holdings, Inc.’s (PLMR - Free Report) shares have surged 91% in a year compared with the industry's growth of 28.7%. The Finance sector and the Zacks S&P 500 composite have returned 26.7% and 24.4%, respectively, in the same time frame. With a market capitalization of $2.55 billion, the average volume of shares traded in the last three months was 0.17 million.
PLMR Outperforms Industry, Sector, S&P 500
Image Source: Zacks Investment Research
New business, strong retention rates, strategic expansion of products’ geographic and distribution footprint, new partnerships and high-quality fixed-income securities continue to drive this Zacks Rank #1 (Strong Buy) property and casualty insurer.
PLMR Witnessing Northbound Estimate Revision
The Zacks Consensus Estimate for Palomar Holdings’ 2024 and 2025 earnings has moved 4.1% and 7.6% north, respectively, in the past 30 days, reflecting analyst optimism.
PLMR’s Growth Projection Encourages
The Zacks Consensus Estimate for Palomar Holdings’ 2024 earnings per share indicates a year-over-year increase of 30.8%. The consensus estimate for revenues is pegged at $527.72 million, implying a year-over-year improvement of 41.4%.
The consensus estimate for 2025 earnings per share and revenues indicates a year-over-year increase of 19.8% and 24.2%, respectively, from the corresponding 2024 estimates.
PLMR’s Return on Capital
Return on equity (ROE) is a measure of profitability reflecting how efficiently the company is utilizing its shareholders’ value. ROE was 20.8% in the first half of 2024, which compared favorably with the industry’s average of 7.9% and expanded 370 basis points year over year. Annualized adjusted return on equity expanded 260 basis points year over year to 23.8% in the first half of 2024. Also, the return on invested capital in the trailing 12 months was 19.2%, better than the industry average of 6%, reflecting the company’s efficiency in utilizing funds to generate income.
Factors Acting in Favor of PLMR
Premiums, which are the principal component of an insurer’s top line, should continue to benefit from the increased volume of policies written across the lines of business. New business generated, strong retention rates, strategic expansion of products’ geographic and distribution footprint and new partnerships should help in retaining the momentum.
High-quality fixed-income securities, a higher average balance of investments and an increase in fixed-income yields favor improvement in net investment income, which witnessed a five-year CAGR (2018-2023) of 49%.
Palomar Holdings’ fee-generating PLMR-FRONT should fuel growth in the medium term. The addition of the fee-based revenue stream to the business is expected to strengthen its earnings base.
The company’s prudent underwriting expertise is reflected in its combined ratio, which has been under 95% since 2017, except in 2020. PLMR’s risk transfer strategy lowers exposure to major events, which, in turn, reduces earnings volatility.
Palomar Holdings has a debt-free balance sheet. Continued operational excellence also helps it maintain a strong capital position. PLMR expects to generate adjusted net income between $124 million and $130 million in 2024.
Other Key Picks
Some other top-ranked stocks from the property and casualty insurance industry are NMI Holdings Inc (NMIH - Free Report) , RLI Corp. (RLI - Free Report) and Arch Capital Group Ltd. (ACGL - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
NMI Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 10.15%. Shares of NMIH have jumped 41.9% in the past year. The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 16.9% and 5.2%, respectively.
RLI’s earnings surpassed estimates in each of the last four quarters, the average surprise being 140.08%. Shares of RLI have gained 17% in the past year. The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings implies year-over-year growth of 23.8% and 2.5%, respectively.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 28.93%. Shares of ACGL have jumped 44% in the past year. The Zacks Consensus Estimate for ACGL’s 2024 and 2025 earnings implies year-over-year growth of 6.6% and 2.4%, respectively.