Palomar Holdings, Inc. (NASDAQ:PLMR)
In contrast to its industry’s 2.2% loss, Palomar Holdings, Inc. (NASDAQ:PLMR) shares have risen 18.2% this year. Since that time, the Zacks S&P 500 index as a whole has fallen 15.6%. An average of 0.1 million shares has been exchanged during the past three months, contributing to a total volume of $1.9 billion.
A high percentage of premium retention, an increase in new business, and a rise in the average balance of investments all played vital roles in the upswing.
Five of the last seven quarters have shown earnings growth for this Zacks Rank #3 (Hold) insurer, while one quarter has shown earnings decline and the other has shown earnings growth.
The VGM Score for PLMR is a solid B. The VGM Score is a tool for finding stocks with the best value, growth, and momentum combination.
Can Shares of PLMR Maintain Their Recent Gains?
Profit for Palomar Holdings, Inc. (NASDAQ:PLMR) is expected to reach $3 in 2022, up 45.3% from the previous year’s reported level, on sales of $358.1 million, according to the Zacks Consensus Estimate. With a projected revenue increase of 33.7% to $478.6 million in 2023, the consensus earnings estimate stands at $3.85 per share, a 28.2% increase from the prior year’s reported amount.
A year ago, Palomar’s return on equity (ROE) was 14%; today, it’s 14.9%, an increase of 1070 basis points. Return on equity measures how well a company returns money to its shareholders.
The new business produced with current partners, great premium retention rates for existing businesses, growth of the distribution footprint, and new alliances are all anticipated to boost Palomar’s premiums, which will boost the company’s bottom line.
Increases in the volume of policies purchased through Palomar Insurance Agency, the company’s internal managing general agency, are anticipated to increase the insurer’s commission and other income.
Over the five years (2017-2021), investment income grew at a CAGR of 33.7%. Investments in high-quality fixed income securities, an increase in the average investment balance, and increased yields on invested assets should all contribute to continued growth.
The commercial earthquake, commercial all risk, and builder’s risk policies written by Palomar Excess and Surplus Insurance Company are projected to be the primary growth drivers for the company.
According to projections made by Palomar Holdings, Inc. (NASDAQ:PLMR), the company’s adjusted net income for 2022 would be between $80 million and $85 million, representing a growth of 54% year over year and an adjusted return on equity (ROE) of 19% at the midpoint of the range.
Palomar Holdings, Inc. (NASDAQ:PLMR) has relied on consistent earnings to keep its finances in good shape. Due to net income and a drop in net operating assets, PLMR has a debt-free balance sheet and positive cash flows from operations in the first half of 2022.
Palomar’s board of directors decided to capitalize on the company’s healthy cash flow by authorizing a $100 million share repurchase program from January 2022 to March 31, 2024. After repurchasing $20 million in shares in the first half of 2022, the remaining authorization is $79.7 million.
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Author Shariq Khan 