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Heritage Insurance Holdings (HRTG)
NYSE:HRTG
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Heritage Insurance Holdings
(NYSE:HRTG)
72Outperform
Positive Factors
Earnings Performance
Heritage Insurance Holdings reported operating EPS of $0.61, beating both the analyst's estimate of $0.48 and the consensus of $0.41.
Profitability
The company now appears to be solidly profitable after several years of price increases and more recent moderating claims inflation.
Valuation
The stock is trading at approximately 100% of book value and 4.6 times forward earnings, suggesting an attractive valuation.
Negative Factors
Capital Constraints
Capital remains tight, as confirmed by the Board’s continued suspension of the quarterly dividend and the lack of any buyback activity.
Growth Limitations
Excess capital is limited, which could limit growth potential and increase wind season risk.
Peer Comparison
Shares of HRTG currently trade at about 1.0x tangible book value, compared to a peer median of 2.3x, indicating that the shares are fairly valued at current levels.
Heritage Insurance Holdings (HRTG) vs. S&P 500 (SPY)
Market Cap
$496.77M
Dividend YieldN/A
Average Volume (3M)265.95K
Price to Earnings (P/E)8.1
Beta (1Y)1.01
Revenue Growth10.84%
EPS Growth16.40%
CountryUS
Employees540
SectorFinancial
Sector Strength83
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)2.01
Shares Outstanding30,608,040
10 Day Avg. Volume348,378
30 Day Avg. Volume265,947
Financial Highlights & Ratios
PEG Ratio0.49
Price to Book (P/B)N/A
Price to Sales (P/S)0.71
Price to Cash Flow (P/CF)-2.60
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$19.50Price Target Upside11.88% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Heritage Insurance Holdings Business Overview & Revenue Model
Company DescriptionHeritage Insurance Holdings, Inc., through its subsidiaries, provides personal and commercial residential insurance products. The company offers personal residential property insurance for single-family homeowners and condominium owners, and rental property insurance in the states of Alabama, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, and Virginia; commercial residential insurance for properties in Florida, New Jersey, and New York; and licensed in the state of Pennsylvania, as well as personal residential and wind-only property insurance. It also provides restoration, and emergency and recovery services; and property management, and reinsurance services. The company writes personal line policies through a network of retail independent agents, wholesale agents, and a partnership with a direct agency, as well as indirectly to approximately 1,500 retail locations through eight wholesale agency relationships; and personal and commercial insurance policies through a network of approximately 70 independent agencies. Heritage Insurance Holdings, Inc. was founded in 2012 and is headquartered in Tampa, Florida.
How the Company Makes MoneyHeritage Insurance Holdings makes money primarily through the sale of insurance policies. The company collects premiums from policyholders, which serve as the main source of revenue. These premiums are calculated based on the risk profile of the insured property, the level of coverage required, and other factors such as location and claims history. Heritage Insurance also invests the premiums it collects in various financial instruments, generating investment income that contributes to its earnings. Additionally, the company partners with a network of independent agents and brokers to expand its reach and increase policy sales, further driving revenue growth.
Heritage Insurance Holdings Financial Statement Overview
Summary
Heritage Insurance Holdings demonstrates strong revenue and profit growth with enhanced operational efficiency. The balance sheet is robust with no debt and improved equity returns; however, there are potential leverage risks. Cash flow metrics are solid, indicating healthy liquidity, though past volatility is a concern.Income Statement
Heritage Insurance Holdings has shown strong revenue growth with a 11.1% increase in 2024 compared to 2023, and a significant improvement in profitability metrics. Gross profit margin stands at 100%, and net profit margin improved to 7.5% from 6.2% a year prior. EBIT and EBITDA margins also increased, indicating better operational efficiency. However, past volatility in EBIT and net income suggests potential risks in sustaining these margins.75
Positive
Balance Sheet
The company has a strong balance sheet with a notable absence of total debt in 2024, resulting in a sound debt-to-equity ratio of 0.00. The equity ratio is 11.8%, indicating a relatively low level of equity financing compared to total assets. Return on equity improved to 21.2% in 2024, reflecting better profitability. Despite these strengths, the low equity ratio points to potential risks related to leverage in the insurance industry.65
Positive
Cash Flow
Operating cash flow has grown significantly by 23.7% from 2023 to 2024, and free cash flow also showed healthy growth. The operating cash flow to net income ratio is 1.42, indicating robust cash generation relative to net earnings. Free cash flow to net income ratio is also strong at 1.42. However, fluctuations in past cash flows highlight potential volatility in cash generation.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 816.99M | 735.50M | 662.46M | 631.56M | 593.38M | Gross Profit |
| 816.99M | 735.50M | 662.46M | 631.56M | 593.38M | EBIT |
| 93.61M | 63.22M | -157.36M | -90.89M | -11.75M | EBITDA |
| 93.61M | 71.90M | -157.36M | -59.62M | 18.29M | Net Income Common Stockholders |
| 61.54M | 45.31M | -154.36M | -74.73M | 9.33M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 452.67M | 553.17M | 916.45M | 1.03B | 1.00B | Total Assets |
| 2.47B | 2.15B | 2.39B | 1.98B | 2.09B | Total Debt |
| 141.34M | 148.19M | 170.19M | 151.93M | 121.00M | Net Debt |
| -452.67M | -315.45M | -110.69M | -207.41M | -319.96M | Total Liabilities |
| 2.18B | 1.93B | 2.26B | 1.64B | 1.65B | Stockholders Equity |
| 290.80M | 220.28M | 131.04M | 343.05M | 442.34M |
| Cash Flow | Free Cash Flow | |||
| 87.09M | 60.52M | -46.64M | 59.12M | 169.46M | Operating Cash Flow |
| 87.09M | 70.42M | -34.26M | 60.13M | 170.21M | Investing Cash Flow |
| -91.60M | 100.81M | -37.86M | -124.48M | 22.06M | Financing Cash Flow |
| -5.19M | 14.55M | -5.06M | -17.28M | -28.90M |
Heritage Insurance Holdings Technical Analysis
Positive
17.43
Price Trends
12.97
Positive
12.42
Positive
11.85
Positive
Market Momentum
0.97
Negative
74.92
Negative
89.97
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HRTG, the sentiment is Positive. The current price of 17.43 is above the 20-day moving average (MA) of 14.72, above the 50-day MA of 12.97, and above the 200-day MA of 11.85, indicating a bullish trend. The MACD of 0.97 indicates Negative momentum. The RSI at 74.92 is Negative, neither overbought nor oversold. The STOCH value of 89.97 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HRTG.
Heritage Insurance Holdings Risk Analysis
Heritage Insurance Holdings disclosed 37 risk factors in its most recent earnings report. Heritage Insurance Holdings 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
Heritage Insurance Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $619.51M | 10.96 | 16.49% | 2.90% | 9.27% | -8.09% | |
73 Outperform | $630.86M | 11.76 | 9.92% | 3.84% | 6.71% | 1000.07% | |
72 Outperform | $496.77M | 8.09 | 24.08% | ― | 10.84% | 16.40% | |
66 Neutral | $426.75M | 9.58 | 6.46% | 4.68% | -16.46% | 69.94% | |
63 Neutral | $13.51B | 9.48 | 9.36% | 4.87% | 16.09% | -8.30% | |
46 Neutral | $270.84M | 54.45 | 2.47% | ― | -6.46% | ― | |
45 Neutral | $536.22M | 7.09 | 37.69% | ― | 1.00% | -77.16% |
* Financial Sector Average
Performance Comparison
HRTG
Heritage Insurance Holdings
17.43
8.05
85.82%
DGICA
Donegal Group
18.32
5.49
42.79%
GBLI
Global Indemnity
29.89
-1.31
-4.20%
UVE
Universal Insurance Holdings
22.65
4.16
22.50%
ACIC
American Coastal Insurance
11.10
0.71
6.83%
NODK
NI Holdings
12.93
-1.77
-12.04%
Heritage Insurance Holdings Earnings Call Summary
Earnings Call Date: Mar 11, 2025 | % Change Since: 46.72% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
While the company faced significant challenges, including decreased fourth-quarter net income and increased loss ratios, the overall performance was strong with substantial annual net income growth, increased tangible book value, and resilience against catastrophes. Legislative changes in Florida and strategic growth in premiums further contribute to a positive outlook.Highlights
Significant Increase in Net Income for 2024
For the full year 2024, Heritage achieved net income of $61.5 million or $2.01 per share, a substantial increase from $45.3 million or $1.73 per share in 2023.
Strong Growth in Tangible Book Value
Tangible book value per share increased by 30% to $9.50 at the end of 2024 compared to the previous year.
Record ROE and Resilience Against Catastrophes
Despite $105 million pretax losses from hurricanes, the company maintained profitability with a notable ROE of 24.1%.
Increase in Gross and Net Premiums Earned
Gross premiums earned rose by 6.1% to $360.5 million, and net premiums earned increased by 12.2% to $199.3 million in the fourth quarter.
Positive Impact of Legislative Changes in Florida
Legislative changes led to a decrease in frivolous lawsuits, improving the economic environment for writing profitable business in Florida.
Strong Investment Income Growth
Net investment income increased by 27% to $8.5 million in the fourth quarter, reflecting strategic alignment with the yield curve.
Lowlights
Decrease in Fourth Quarter Net Income
Fourth-quarter net income decreased to $20.3 million from $30.9 million in the previous year due to higher catastrophe losses.
Higher Net Loss and Expense Ratios
The net loss ratio increased to 54.7% from 51% last year, and the net expense ratio rose to 35% from 33.9% in the prior quarter.
Impact of California Wildfires
Heritage anticipates $35-$40 million in pretax net catastrophe losses from California wildfires in the first quarter of 2025.
Company Guidance
During the Heritage Insurance Holdings Fourth Quarter 2024 Earnings Conference Call, the company provided several key metrics and guidance for the year. For the full year 2024, Heritage reported a net income of $61.5 million or $2.01 per share, up from $45.3 million or $1.73 per share in 2023. The tangible book value per share grew by 30% to $9.50 by December 31, 2024, and the return on equity (ROE) was 24.1%. Despite $105 million in pretax losses from hurricanes, the company maintained profitability. In the fourth quarter, net income was $20.3 million, or $0.66 per share, although it decreased from the previous year's $30.9 million due to higher catastrophe losses. Gross premiums earned rose by 6.1% to $360.5 million, while net premiums earned increased by 12.2% to $199.3 million. The net loss ratio was 54.7%, and the net combined ratio was 89.7%. The company maintained $1.3 billion in reinsurance coverage in the southeast, $1.1 billion in the northeast, and $750 million in Hawaii. Looking ahead to 2025, Heritage anticipates rate increases will continue to provide a tailwind for growth, and the company expects approximately $35 million to $40 million in pretax net catastrophe losses for the first quarter from California wildfires.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.