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HCI Group Inc (HCI)
NYSE:HCI
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HCI Group
(NYSE:HCI)
72Outperform
Positive Factors
Financial Performance
HCI reported operating EPS of $0.31 per share, handily beating both the loss estimate and consensus expectations.
Growth Opportunities
Take-out policies continue to be a tailwind for growth, as HCI continues to take on additional assumptions and previous acquisitions renew at a high rate on its books.
Technology and Partnerships
Management has received several inbound inquiries from other companies interested in partnerships to use its technology, indicating potential for lucrative long-term opportunities.
Negative Factors
Valuation Concerns
The stock is currently trading at 8 times the 2025 EPS estimate, which may not fully account for potential growth.
HCI Group (HCI) vs. S&P 500 (SPY)
Market Cap
$1.49B
Dividend Yield1.15%
Average Volume (3M)90.39K
Price to Earnings (P/E)15.6
Beta (1Y)0.35
Revenue Growth36.21%
EPS Growth18.17%
CountryUS
Employees547
SectorFinancial
Sector Strength77
IndustryInsurance
Share Statistics
EPS (TTM)8.79
Shares Outstanding10,766,734
10 Day Avg. Volume127,317
30 Day Avg. Volume90,391
Financial Highlights & Ratios
PEG Ratio0.86
Price to Book (P/B)N/A
Price to Sales (P/S)1.99
Price to Cash Flow (P/CF)5.00
P/FCF Ratio4.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$158.25Price Target Upside15.47% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
HCI Group Business Overview & Revenue Model
Company DescriptionHCI Group, Inc. engages in the provision of property and casualty insurance. It operates through the following segments: Insurance Operations, Real Estate, and Corporate and Other. The company was founded by Paresh Patel, Gregory Politis, and Martin A. Traber on November 30, 2006 and is headquartered in Tampa, FL.
How the Company Makes MoneyHCI Group generates its revenue primarily through the underwriting and sale of insurance policies, with a significant portion coming from homeowners insurance. The company collects premiums from policyholders, which form the core of its income. Additionally, HCI earns revenue through its reinsurance operations, which involve selling portions of its insurance risk to other insurers, thereby receiving reinsurance premiums. The company also has a technology arm that provides IT services and solutions, contributing to its overall revenue. HCI's strategic partnerships with other insurers and reinsurers, as well as its focus on leveraging technology to enhance efficiency and customer experience, further bolster its revenue streams.
HCI Group Financial Statement Overview
Summary
HCI Group shows robust revenue growth and profitability with a strong income statement. However, concerns arise from negative operating cash flows and declining free cash flow, which could affect future operations. The balance sheet shows moderate leverage with a solid capital structure.Income Statement
The income statement shows strong revenue growth with a notable increase from $550.67 million in 2023 to $750.05 million in 2024, representing a growth rate of 36.14%. The gross profit margin stands at a solid 100% due to the company's revenue equating to gross profit. The net profit margin improved significantly to 17.00%, indicating enhanced profitability. However, the absence of EBITDA in 2024 suggests a potential area of concern in operational efficiency.78
Positive
Balance Sheet
The balance sheet highlights a high debt-to-equity ratio of 0.41, suggesting moderate leverage that is manageable but could pose risks if liabilities continue to rise. The return on equity is healthy at 28.13%, reflecting effective utilization of shareholder funds. However, the equity ratio of 60.11% suggests a solid capital structure, indicating strong financial stability.65
Positive
Cash Flow
Cash flow analysis reveals a concerning trend with operating cash flow turning negative in 2024, contrasting sharply with positive cash flows in previous years. The free cash flow growth rate is also negative, reflecting decreased liquidity. The operating cash flow to net income ratio is negative, indicating a disconnect between reported earnings and cash generation.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 750.05M | 550.67M | 496.45M | 407.92M | 274.08M | Gross Profit |
| 750.05M | 528.04M | 471.47M | 386.07M | 260.28M | EBIT |
| 686.90M | 474.17M | -64.68M | -600.00K | 35.07M | EBITDA |
| 0.00 | 136.95M | -52.64M | 340.64M | 57.41M | Net Income Common Stockholders |
| 109.95M | 79.03M | -54.60M | 7.24M | 27.58M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 97.75M | 770.50M | 718.76M | 671.53M | 503.06M | Total Assets |
| 754.20M | 1.81B | 1.80B | 1.18B | 941.31M | Total Debt |
| 186.44M | 209.90M | 212.41M | 62.71M | 184.28M | Net Debt |
| 87.51M | -326.57M | -22.45M | -566.24M | -247.07M | Total Liabilities |
| 1.76B | 1.39B | 1.55B | 762.40M | 740.18M | Stockholders Equity |
| 453.33M | 324.84M | 162.60M | 323.37M | 201.14M |
| Cash Flow | Free Cash Flow | |||
| -6.59M | 225.50M | -10.15M | 93.19M | 70.87M | Operating Cash Flow |
| -6.34M | 230.66M | -12.00K | 96.50M | 77.31M | Investing Cash Flow |
| -97.47M | 4.27M | -434.54M | 36.85M | 143.22M | Financing Cash Flow |
| -75.17M | 67.12M | 41.07M | 64.30M | -16.70M |
HCI Group Technical Analysis
Positive
137.05
Price Trends
122.16
Positive
118.23
Positive
106.88
Positive
Market Momentum
4.91
Negative
68.47
Neutral
82.61
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HCI, the sentiment is Positive. The current price of 137.05 is above the 20-day moving average (MA) of 127.06, above the 50-day MA of 122.16, and above the 200-day MA of 106.88, indicating a bullish trend. The MACD of 4.91 indicates Negative momentum. The RSI at 68.47 is Neutral, neither overbought nor oversold. The STOCH value of 82.61 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HCI.
HCI Group Risk Analysis
HCI Group disclosed 39 risk factors in its most recent earnings report. HCI Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
HCI Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $591.98M | 10.47 | 16.49% | 3.09% | 9.27% | -8.09% | |
73 Outperform | $368.21M | 6.24 | 24.08% | ― | 10.07% | 136.26% | |
72 Outperform | $1.49B | 15.60 | 28.26% | 1.15% | 36.21% | 18.17% | |
65 Neutral | $171.53M | 10.62 | 36.81% | ― | 6.39% | ― | |
64 Neutral | $13.79B | 10.52 | 9.20% | 4.24% | 17.25% | -7.60% |
* Financial Sector Average
Performance Comparison
HCI
HCI Group
137.05
26.92
24.44%
HALL
Hallmark Financial Services
0.05
-0.75
-93.75%
KINS
Kingstone Companies
13.67
9.84
256.92%
UVE
Universal Insurance Holdings
21.33
2.35
12.38%
HRTG
Heritage Insurance Holdings
12.53
4.67
59.41%
HCI Group Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: 10.56% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance by HCI Group, marked by robust growth in policyholder numbers and premiums, financial strength, and strategic expansion through Exzeo Group. Despite the significant impact of Hurricane Milton, the company demonstrated resilience and continued profitability, highlighting the positive trajectory of the business.Highlights
Strong Policyholder Retention and Growth
HCI Group maintained a retention rate of approximately 90% and grew policies in-force from 247,000 to more than 272,000, with in-force premium growth of 22% to over $1.2 billion.
Successful Citizens Policyholder Acquisition
HCI offered over 68,000 Citizens policyholders a private market option, with nearly 53,000 moving to HCI, achieving a blended success rate of 77%.
Financial Strength and Dividend Payments
HCI paid a dividend of $0.40 per share, marking the 57th consecutive quarterly dividend, and increased book value by almost $9 per share, ending the year at $42.10.
Reduced Debt and Improved Financial Ratios
HCI reduced consolidated debt by $80 million, improved the debt-to-capital ratio from 50% to 34%, and grew underwriter surplus by 50%.
Exzeo Group Profitability
Exzeo Group, the technology unit, earned approximately $35 million of pretax income in 2024, with expectations of significant growth in 2025.
Lowlights
Impact of Hurricane Milton
Hurricane Milton resulted in a net impact of $128 million, including $78 million of net loss expense and a $50 million reversal of benefits under a reinsurance agreement.
Company Guidance
During HCI Group's Fourth Quarter 2024 earnings call, the company provided extensive guidance on its financial performance and strategic future. For the full year, HCI achieved a pretax income of $173 million and a diluted earnings per share of $8.89, despite experiencing three hurricanes, including Hurricane Milton, which had a net impact of $128 million. The company demonstrated strong operational efficiency, growing in-force premiums by 22% to over $1.2 billion and increasing policies in-force from 247,000 to more than 272,000, while reducing its underlying net combined ratio by 10 percentage points. The retention rate of existing customers remained strong at approximately 90%, and the company offered over 68,000 Citizens policyholders a private market option, with nearly 53,000 transitioning to HCI, reflecting a 77% success rate. Additionally, a new insurance company, Condo Owners Reciprocal Exchange, was launched, reaching approximately $70 million in in-force premium. Despite the active storm season, the company continued to deliver shareholder value, paying a dividend of $0.40 per share, marking its 57th consecutive quarterly dividend. Looking forward, HCI aims to leverage its technology to expand its market presence and explore strategic alternatives, particularly through its newly named Exzeo Group, which posted a pretax income of approximately $35 million in 2024.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.