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Palomar Holdings Inc (PLMR)
NASDAQ:PLMR
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Palomar Holdings
(NASDAQ:PLMR)
78Outperform
Positive Factors
Competitive Advantage
Palomar is a specialty insurer with a competitive advantage in underserved markets due to its access to admitted and surplus lines paper.
Earnings
Palomar Holdings reported an EPS of $1.52, surpassing both the estimate of $1.24 and the consensus of $1.23, driven by a lower-than-expected combined ratio and higher-than-expected NEP and NII.
Growth Potential
Strong growth and returns for Palomar are seen as sustainable due to hard market conditions, event-driven opportunities, and new lines of business led by industry veterans.
Negative Factors
Loss Ratio
The consolidated loss ratio was overall higher than projected, offset by a higher catastrophe loss ratio.
Palomar Holdings (PLMR) vs. S&P 500 (SPY)
Market Cap
$3.45B
Dividend YieldN/A
Average Volume (3M)256.65K
Price to Earnings (P/E)28.9
Beta (1Y)0.85
Revenue Growth46.90%
EPS Growth43.99%
CountryUS
Employees253
SectorFinancial
Sector Strength84
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)4.48
Shares Outstanding26,677,622
10 Day Avg. Volume250,937
30 Day Avg. Volume256,651
Financial Highlights & Ratios
PEG Ratio0.66
Price to Book (P/B)N/A
Price to Sales (P/S)6.23
Price to Cash Flow (P/CF)11.90
P/FCF Ratio11.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$140.00Price Target Upside3.71% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Palomar Holdings Business Overview & Revenue Model
Company DescriptionPalomar Holdings, Inc., an insurance holding company, provides specialty property insurance to residential and commercial customers. The company offers personal and commercial specialty property insurance products, including residential and commercial earthquake, commercial all risk, specialty homeowners, inland marine, Hawaii hurricane, and residential flood, as well as other products, such as assumed reinsurance, commercial flood, real estate error and omission, and real estate investor products. It markets and distributes its products through retail agents, wholesale brokers, program administrators, and carrier partnerships. The company was formerly known as GC Palomar Holdings. Palomar Holdings, Inc. was incorporated in 2013 and is headquartered in La Jolla, California.
How the Company Makes MoneyPalomar Holdings generates revenue primarily through the underwriting of specialty insurance policies. The company collects premiums from policyholders in exchange for providing coverage against specific risks, such as earthquakes and hurricanes. Palomar employs a focused underwriting strategy to assess and price risk accurately, allowing it to maintain profitability while offering competitive rates. Additionally, the company leverages reinsurance agreements to manage its exposure to large-scale catastrophic events, which helps stabilize its financial performance. Key revenue streams include premium income from policyholders and investment income from the company's portfolio of invested assets. Significant partnerships with reinsurers and distribution partners also contribute to Palomar's ability to expand its market reach and enhance its product offerings.
Palomar Holdings Financial Statement Overview
Summary
Palomar Holdings shows strong financial health with substantial revenue and net income growth. The balance sheet is solid with zero debt and increasing equity. Cash flow is robust, though high investing outflows may impact liquidity. Concerns arise from lack of EBIT/EBITDA figures and asset fluctuations.Income Statement
Palomar Holdings has demonstrated strong revenue growth, with an impressive increase from $113.3M in 2019 to $553.9M in 2024. The gross profit margin is robust, consistently at 100% due to the nature of the insurance industry. Net profit margins have improved, reaching 21.2% in 2024 from 9.4% in 2019. However, the absence of EBIT and EBITDA in 2024 raises concerns about operational efficiency, affecting the overall score.85
Very Positive
Balance Sheet
The company maintains a healthy balance sheet with zero debt in 2024, resulting in a favorable debt-to-equity ratio. Stockholders' equity has significantly increased, enhancing the equity ratio to 87.8% in 2024. However, fluctuations in total assets and a decrease in total liabilities indicate potential volatility. The strong equity position supports financial stability.75
Positive
Cash Flow
Palomar Holdings exhibits strong cash flow performance with free cash flow increasing substantially to $260.9M in 2024 from $38.8M in 2019. Operating cash flow to net income ratio remains robust, indicating efficient cash conversion. However, the significant increase in investing cash outflows might pose a risk to future liquidity if not managed properly.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 553.86M | 375.93M | 327.09M | 247.79M | 168.46M |
| Gross Profit | ||||
| 553.86M | 375.93M | 327.09M | 247.79M | 168.46M |
| EBIT | ||||
| 0.00 | 107.42M | 68.42M | 57.14M | 6.22M |
| EBITDA | ||||
| 0.00 | 111.92M | 72.54M | 60.68M | 7.56M |
| Net Income Common Stockholders | ||||
| 117.57M | 79.20M | 52.17M | 45.85M | 6.26M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 149.26M | 51.55M | 583.17M | 482.97M | 431.52M |
| Total Assets | ||||
| 829.77M | 1.71B | 1.30B | 925.73M | 729.09M |
| Total Debt | ||||
| 0.00 | 52.60M | 36.40M | 2.19M | 0.00 |
| Net Debt | ||||
| -1.80M | 1.05M | -31.71M | -48.10M | -33.54M |
| Total Liabilities | ||||
| 1.53B | 1.24B | 914.06M | 531.57M | 365.38M |
| Stockholders Equity | ||||
| 729.03M | 471.25M | 384.75M | 394.17M | 363.71M |
| Cash Flow | Free Cash Flow | |||
| 260.91M | 109.35M | 163.65M | 82.96M | 49.48M |
| Operating Cash Flow | ||||
| 261.16M | 116.11M | 169.58M | 87.81M | 53.55M |
| Investing Cash Flow | ||||
| -306.24M | -128.48M | -156.81M | -58.19M | -181.44M |
| Financing Cash Flow | ||||
| 73.77M | -3.94M | 5.02M | -13.04M | 128.33M |
Palomar Holdings Technical Analysis
Positive
134.99
Price Trends
118.03
Positive
110.93
Positive
101.06
Positive
Market Momentum
3.85
Positive
63.51
Neutral
65.93
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PLMR, the sentiment is Positive. The current price of 134.99 is above the 20-day moving average (MA) of 128.38, above the 50-day MA of 118.03, and above the 200-day MA of 101.06, indicating a bullish trend. The MACD of 3.85 indicates Positive momentum. The RSI at 63.51 is Neutral, neither overbought nor oversold. The STOCH value of 65.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PLMR.
Palomar Holdings Risk Analysis
Palomar Holdings disclosed 50 risk factors in its most recent earnings report. Palomar 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
Palomar Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $3.45B | 28.88 | 19.59% | ― | 46.90% | 43.99% | |
74 Outperform | $601.25M | 10.63 | 16.49% | 2.99% | 9.27% | -8.09% | |
72 Outperform | $1.47B | 15.37 | 28.26% | 1.17% | 36.21% | 18.17% | |
70 Outperform | $3.10B | 6.62 | 26.78% | 2.27% | 18.27% | 385.75% | |
65 Neutral | $5.39B | 27.48 | 6.82% | 1.65% | 15.35% | -44.64% | |
64 Neutral | $14.46B | 10.12 | 8.75% | 4.25% | 17.00% | -11.86% | |
59 Neutral | $4.23B | 13.51 | 12.01% | 1.89% | -6.08% | ― |
* Financial Sector Average
Performance Comparison
PLMR
Palomar Holdings
134.99
52.78
64.20%
MCY
Mercury General
56.60
8.74
18.26%
SIGI
Selective Insurance Group
90.49
-11.54
-11.31%
KMPR
Kemper
67.30
8.18
13.84%
UVE
Universal Insurance Holdings
21.87
2.96
15.65%
HCI
HCI Group
139.60
24.07
20.83%
Palomar Holdings Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: 23.86% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant growth in gross written premiums and adjusted net income, successful strategic initiatives, and strong performance across various segments. However, challenges from the Los Angeles wildfires and declines in the fronting business were noted. Overall, the positive aspects and growth prospects outweigh the negatives.Highlights
Record Gross Written Premium Growth
Palomar Holdings achieved a 23% gross written premium growth in Q4 2024, and a 35% growth for the full year, with 39% growth when excluding runoff lines of business.
Significant Adjusted Net Income Growth
The company reported a 48% adjusted net income growth in Q4, and 43% for the full year 2024, despite $8 million in catastrophe losses.
Strong Capital Position
Stockholders' equity increased by 55% year over year, and 30% when excluding the equity issuance.
Successful Strategic Initiatives
Palomar successfully executed its strategic objectives, including scaling the organization and delivering predictable earnings.
Positive Reinsurance Market Indicators
Despite industry losses from wildfires, there is optimism for reinsurance renewals with recent catastrophe bond market activity suggesting strong investor appetite.
Casualty Segment Growth
Casualty segment saw a premium increase of 112% year over year, driven by strong performance in various liability lines.
Acquisition of First Indemnity of America
Closed acquisition of surety company First Indemnity of America, expected to be an important growth vector.
Lowlights
Impact of Los Angeles Wildfires
While the direct financial impact was modest, the wildfires have created dislocation and challenges in the California homeowners market.
Fronting Business Decline
Fronting Group's premium declined by 33% in the fourth quarter, primarily due to separation from Omaha National.
Challenges in Commercial Earthquake Market
The commercial earthquake market experienced an average rate decrease of approximately 5%, with ongoing rate softening expected.
Pressure from Reinsurance Costs
Excess of loss reinsurance remains the largest expense and market uncertainty due to wildfires may impact future pricing.
Company Guidance
During the Palomar Holdings, Inc. earnings call for the fourth quarter and full year 2024, the company provided robust financial guidance and shared strategic goals for 2025. They reported 23% growth in gross written premium, which rose to 39% when excluding runoff lines, and a 48% increase in adjusted net income despite $8 million in catastrophe losses, leading to an adjusted return on equity of 23% for the quarter. The company's stockholders' equity increased by 55% year-over-year, or 30% excluding equity issuance. Palomar announced its 2025 adjusted net income guidance to be between $180 million and $192 million, with expectations for a mid to high teens growth in earthquake premiums and growth in other segments like crop and casualty lines. The company emphasized strategic initiatives for 2025, including the integration of recent acquisitions and maintaining a strong focus on profitable growth, while navigating market challenges such as the impact of the Los Angeles wildfires on the California insurance landscape.Palomar Holdings Corporate Events
Executive/Board Changes
Palomar Holdings Extends CEO Mac Armstrong’s Term
Positive
Dec 30, 2024
Palomar Holdings, Inc. has entered into an executive employment agreement with its CEO, Mac Armstrong, extending his term through January 2029. The agreement includes a base salary, bonus potential, long-term incentives, and specific benefits if terminated under certain conditions, highlighting the company’s commitment to retaining leadership and potentially stabilizing its market position.
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.