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Trupanion Stock Rallies 37.9% Year to Date: More Room for Upside?
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Trupanion Inc. (TRUP - Free Report) shares have rallied 37.9% year to date, outperforming the industry's growth of 30.3%. The Finance sector and the Zacks S&P 500 index have returned 15.2% and 20.2% in the said time frame, respectively. With a market capitalization of $1.77 billion, the average volume of shares traded in the last three months was 0.6 million.
TRUP Outperforms Industry, Sector & S&P YTD
Image Source: Zacks Investment Research
The rally was driven by its focus on pet health and well-being in an underpenetrated pet insurance market, product launches, extended operating boundaries and a solid capital position.
TRUP Trading Above 50-Day and 200-Day Moving Average
This Zacks Rank #3 (Hold) accident and health insurer closed at $42.05 on Wednesday, above its 50-day and 200-day simple moving average (SMA) of $40.83 and $31.04, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
TRUP’s Growth Projection Encourages
The Zacks Consensus Estimate for Trupanion’s 2024 earnings per share indicates a year-over-year increase of 68.5%. The consensus estimate for revenues is pegged at $1.27 billion, implying a year-over-year improvement of 14.8%.
The consensus estimate for 2025 earnings per share and revenues indicates a year-over-year increase of 87.1% and 6.9%, respectively, from the corresponding 2024 estimates.
The long-term earnings growth is expected to be 48.5%, better than the industry average of 20.9%. TRUP has an impressive Growth Score of A. This style score helps analyze the growth prospects of a company.
Trupanion's Earnings Surprise History
Trupanion has a decent earnings surprise history. Its earnings beat estimates in each of the last four quarters with an average surprise of 43.32%.
Mixed Analyst Sentiment Instills Confidence in TRUP
Four of the six analysts covering the stock have raised estimates for 2024, and two analysts have raised the same for 2025 over the past 60 days. Two analysts have lowered the estimates for both 2024 and 2025.
The consensus estimate for 2024 loss has narrowed to 34 cents from 40 cents expected earlier, while the consensus estimate for 2025 is pegged at an earnings of 9 cents per share, up from 4 cents expected earlier.
Will TRUP’s Rally Stay?
Average monthly retention continues to remain strong, coupled with an increase in total enrolled subscription pets. The cost of veterinary care continues to rise, outpacing consumer discretionary income, as noted by management. The role of pricing, thus, plays an important part, both in keeping the growth pace alive and comforting pet parents.
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. Given the underpenetrated market, it sees opportunities to enroll more pets with increasing acquisition spend.
To ramp up growth, it is introducing new products. 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 17% growth to gross new pet addition in the second quarter of 2024. TRUP intends to launch a Trupanion-branded product in Europe this year and is hopeful about its partnership with Aflac Incorporated in the United States.
A solid capital position aided by operational strength 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.
TRUP projects revenues in the range of $1.263-$1.279 billion, up 14% from the 2023 level. Subscription revenues are projected between $850 million and $858 million compared with the previous guidance of $842-$862 million. Total adjusted operating income is expected in the range of $108-$115 million compared with the earlier guidance of $100-$120 million.
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.
Risk
TRUP’s trailing 12-month ROE of -6.2% is worse when compared with the industry average of 16.1%, reflecting TRUP’s inefficiency in using shareholders' funds. Also, the return on invested capital in the trailing 12 months was -1.1%, comparing unfavorably with the industry average of 7.7%, reflecting the insurer’s inefficiency in utilizing funds to generate income.
The Zacks Consensus Estimate for Marsh & McLennan’s 2024 and 2025 earnings implies year-over-year growth of 9.3% and 8.1%, respectively. MMC beat earnings estimates in each of the past four quarters, with an average surprise of 5.80%. In the past year, shares of MMC have gained 15.7%.
The Zacks Consensus Estimate for Ryan Specialty’s 2024 and 2025 earnings implies year-over-year growth of 31.1% and 21.9%, respectively. It beat earnings estimates in one of the past four quarters while matched in the other three, with an average surprise of 0.44%. In the past year, shares of RYAN have jumped 37%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2024 and 2025 earnings implies year-over-year growth of 9.1% and 7%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 27.01%. In the past year, shares of CINF have climbed 28.5%.
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Trupanion Stock Rallies 37.9% Year to Date: More Room for Upside?
Trupanion Inc. (TRUP - Free Report) shares have rallied 37.9% year to date, outperforming the industry's growth of 30.3%. The Finance sector and the Zacks S&P 500 index have returned 15.2% and 20.2% in the said time frame, respectively. With a market capitalization of $1.77 billion, the average volume of shares traded in the last three months was 0.6 million.
TRUP Outperforms Industry, Sector & S&P YTD
Image Source: Zacks Investment Research
The rally was driven by its focus on pet health and well-being in an underpenetrated pet insurance market, product launches, extended operating boundaries and a solid capital position.
TRUP Trading Above 50-Day and 200-Day Moving Average
This Zacks Rank #3 (Hold) accident and health insurer closed at $42.05 on Wednesday, above its 50-day and 200-day simple moving average (SMA) of $40.83 and $31.04, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
TRUP’s Growth Projection Encourages
The Zacks Consensus Estimate for Trupanion’s 2024 earnings per share indicates a year-over-year increase of 68.5%. The consensus estimate for revenues is pegged at $1.27 billion, implying a year-over-year improvement of 14.8%.
The consensus estimate for 2025 earnings per share and revenues indicates a year-over-year increase of 87.1% and 6.9%, respectively, from the corresponding 2024 estimates.
The long-term earnings growth is expected to be 48.5%, better than the industry average of 20.9%. TRUP has an impressive Growth Score of A. This style score helps analyze the growth prospects of a company.
Trupanion's Earnings Surprise History
Trupanion has a decent earnings surprise history. Its earnings beat estimates in each of the last four quarters with an average surprise of 43.32%.
Mixed Analyst Sentiment Instills Confidence in TRUP
Four of the six analysts covering the stock have raised estimates for 2024, and two analysts have raised the same for 2025 over the past 60 days. Two analysts have lowered the estimates for both 2024 and 2025.
The consensus estimate for 2024 loss has narrowed to 34 cents from 40 cents expected earlier, while the consensus estimate for 2025 is pegged at an earnings of 9 cents per share, up from 4 cents expected earlier.
Will TRUP’s Rally Stay?
Average monthly retention continues to remain strong, coupled with an increase in total enrolled subscription pets. The cost of veterinary care continues to rise, outpacing consumer discretionary income, as noted by management. The role of pricing, thus, plays an important part, both in keeping the growth pace alive and comforting pet parents.
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. Given the underpenetrated market, it sees opportunities to enroll more pets with increasing acquisition spend.
To ramp up growth, it is introducing new products. 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 17% growth to gross new pet addition in the second quarter of 2024. TRUP intends to launch a Trupanion-branded product in Europe this year and is hopeful about its partnership with Aflac Incorporated in the United States.
A solid capital position aided by operational strength 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.
TRUP projects revenues in the range of $1.263-$1.279 billion, up 14% from the 2023 level. Subscription revenues are projected between $850 million and $858 million compared with the previous guidance of $842-$862 million. Total adjusted operating income is expected in the range of $108-$115 million compared with the earlier guidance of $100-$120 million.
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.
Risk
TRUP’s trailing 12-month ROE of -6.2% is worse when compared with the industry average of 16.1%, reflecting TRUP’s inefficiency in using shareholders' funds. Also, the return on invested capital in the trailing 12 months was -1.1%, comparing unfavorably with the industry average of 7.7%, reflecting the insurer’s inefficiency in utilizing funds to generate income.
Key Picks
Investors interested in the insurance industry may look at some better-ranked players like Marsh & McLennan Companies, Inc. (MMC - Free Report) , Ryan Specialty Holdings Inc. (RYAN - Free Report) and Cincinnati Financial Corporation (CINF - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Marsh & McLennan’s 2024 and 2025 earnings implies year-over-year growth of 9.3% and 8.1%, respectively. MMC beat earnings estimates in each of the past four quarters, with an average surprise of 5.80%. In the past year, shares of MMC have gained 15.7%.
The Zacks Consensus Estimate for Ryan Specialty’s 2024 and 2025 earnings implies year-over-year growth of 31.1% and 21.9%, respectively. It beat earnings estimates in one of the past four quarters while matched in the other three, with an average surprise of 0.44%. In the past year, shares of RYAN have jumped 37%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2024 and 2025 earnings implies year-over-year growth of 9.1% and 7%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 27.01%. In the past year, shares of CINF have climbed 28.5%.