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Trupanion (TRUP)
NASDAQ:TRUP
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Trupanion
(NASDAQ:TRUP)
59Neutral
Positive Factors
Customer Retention
Despite the price increases, customer retention remains high at roughly 98%.
Earnings
The company reported Q3 results that were ahead on revenue and adj. operating income.
Valuation
The long-term opportunity is significant and the current valuation is attractive with shares below 2x revenue.
Negative Factors
Margin Pressure
Management expressed confidence that after months of significant margin pressure, Trupanion is approaching a sustainable margin position to support increased pet acquisition spend.
Trupanion (TRUP) vs. S&P 500 (SPY)
Market Cap
$1.49B
Dividend YieldN/A
Average Volume (3M)782.21K
Price to Earnings (P/E)―
Beta (1Y)2.08
Revenue Growth15.97%
EPS Growth78.77%
CountryUS
Employees1,130
SectorFinancial
Sector Strength85
IndustryInsurance - Specialty
Share Statistics
EPS (TTM)-0.23
Shares Outstanding42,490,665
10 Day Avg. Volume447,367
30 Day Avg. Volume782,212
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.22
Price to Cash Flow (P/CF)16.60
P/FCF Ratio14.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$52.67Price Target Upside53.38% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Trupanion Business Overview & Revenue Model
Company DescriptionTrupanion, Inc. is a leading provider of medical insurance for cats and dogs throughout the United States, Canada, and Puerto Rico. The company operates in the pet insurance sector and offers comprehensive pet medical insurance plans that cover a variety of medical expenses, including veterinary treatments, diagnostic tests, surgeries, and hospital stays. Trupanion is focused on providing pet owners with the financial support needed to ensure their pets receive high-quality medical care.
How the Company Makes MoneyTrupanion makes money primarily through the collection of monthly premiums from its policyholders. The company's revenue model is based on a subscription-like service where pet owners pay a monthly fee in exchange for coverage of eligible veterinary expenses. Key revenue streams include premium payments from policyholders, underwriting fees, and investment income from the reserves held to pay future claims. Trupanion's earnings are influenced by factors such as the pricing of insurance policies, claim frequency and severity, and its ability to attract and retain customers. The company's partnerships with veterinary clinics also play a significant role, as they help facilitate direct payment for services, enhancing convenience for pet owners and potentially increasing customer retention.
Trupanion Financial Statement Overview
Summary
Trupanion shows strong revenue growth and improved cash flow, indicating future profitability potential. However, negative profit margins and return on equity highlight ongoing operational and efficiency challenges.Income Statement
Trupanion's TTM (Trailing-Twelve-Months) revenue grew by 15.97% compared to the previous year, demonstrating robust top-line growth. However, the company reported negative EBIT and net income margins, indicating ongoing operational challenges. Gross profit margin improved to 13.91% in the TTM, but profitability remains an issue with a net profit margin of -0.75%. Despite growth, achieving profitability is a concern.55
Neutral
Balance Sheet
The company's balance sheet shows a moderate debt-to-equity ratio of 0.40, indicating a balanced approach to leverage. The equity ratio stands at 40.06%, reflecting a stable capital structure. However, negative return on equity (-2.98%) signals inefficiencies in generating returns for shareholders. Overall, the balance sheet remains stable but profitability issues persist.60
Neutral
Cash Flow
Trupanion reported a significant improvement in operating cash flow, with a free cash flow of $38.57 million in the TTM. The free cash flow to net income ratio indicates better cash management despite negative net income. The company has shown resilience in cash generation; however, sustainable profitability is essential for long-term health.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.29B | 1.11B | 905.18M | 698.99M | 502.03M | Gross Profit |
| 178.80M | 131.02M | 122.19M | 104.35M | 81.90M | EBIT |
| -9.51M | -40.66M | -42.75M | -35.02M | -4.35M | EBITDA |
| 21.33M | -20.48M | -29.01M | -23.25M | 2.73M | Net Income Common Stockholders |
| -9.63M | -44.69M | -44.67M | -35.53M | -5.84M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 307.38M | 277.17M | 222.41M | 213.41M | 229.74M | Total Assets |
| 806.85M | 782.95M | 671.63M | 562.58M | 498.25M | Total Debt |
| 128.89M | 128.93M | 69.46M | 0.00 | 0.00 | Net Debt |
| -31.41M | -18.57M | 3.85M | -87.40M | -139.88M | Total Liabilities |
| 483.58M | 479.23M | 366.33M | 230.38M | 158.31M | Stockholders Equity |
| 323.27M | 303.72M | 305.30M | 332.20M | 339.94M |
| Cash Flow | Free Cash Flow | |||
| 38.57M | 358.00K | -25.09M | -4.90M | 14.09M | Operating Cash Flow |
| 48.29M | 18.64M | -8.00M | 7.46M | 21.54M | Investing Cash Flow |
| -13.46M | 7.64M | -67.52M | -51.91M | -76.75M | Financing Cash Flow |
| -3.96M | 59.13M | 60.74M | -1.13M | 170.85M |
Trupanion Technical Analysis
Negative
34.34
Price Trends
39.63
Negative
45.26
Negative
43.24
Negative
Market Momentum
-0.43
Negative
48.33
Neutral
46.41
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TRUP, the sentiment is Negative. The current price of 34.34 is below the 20-day moving average (MA) of 36.08, below the 50-day MA of 39.63, and below the 200-day MA of 43.24, indicating a bearish trend. The MACD of -0.43 indicates Negative momentum. The RSI at 48.33 is Neutral, neither overbought nor oversold. The STOCH value of 46.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TRUP.
Trupanion Risk Analysis
Trupanion disclosed 57 risk factors in its most recent earnings report. Trupanion 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
Trupanion Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $71.47B | 29.20 | 50.91% | 1.13% | 8.33% | 7.70% | |
73 Outperform | $13.93B | 37.44 | 101.78% | ― | 6.40% | 891.13% | |
65 Neutral | $4.81B | 13.49 | 5.49% | ― | 0.50% | ― | |
63 Neutral | $14.39B | 9.81 | 8.95% | 4.37% | 16.38% | -11.64% | |
59 Neutral | $1.49B | ― | -3.07% | ― | 15.97% | 78.77% | |
58 Neutral | $74.57M | 337.38 | 0.36% | ― | -10.82% | ― | |
53 Neutral | $815.37M | ― | -8.86% | ― | -2.22% | 92.17% |
* Financial Sector Average
Performance Comparison
TRUP
Trupanion
34.34
8.24
31.57%
PETS
Petmed Express
3.51
-1.06
-23.19%
ZTS
Zoetis
151.73
-12.38
-7.54%
ELAN
Elanco Animal Health
9.15
-6.41
-41.20%
CHWY
Chewy
31.52
14.47
84.87%
WOOF
Petco Health and Wellness Company
2.86
0.91
46.67%
Trupanion Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: -27.72% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call for Trupanion highlighted significant achievements, including strong subscription revenue growth, increased free cash flow, and successful international expansion. However, challenges such as decreased retention, a goodwill impairment charge, and high inflation impacting margins were also noted. Despite the lowlights, the call conveyed a positive outlook with expectations of continued growth and improvement in 2025.Highlights
Record Subscription Revenue Growth
Subscription revenue grew 20% year-over-year, and the company achieved its highest quarterly subscription adjusted operating margin in history, more than doubling from a low point in early 2023.
Strong Free Cash Flow
Trupanion generated $39 million in free cash flow, an all-time high, primarily driven by higher adjusted operating income.
Major Milestone in Pet Protection
Trupanion surpassed protecting over 1 million cats and dogs, with approximately 257,000 added in the last 12 months, mostly from flagship products.
Improved Member Experience
Investments in software advancements led to significant improvements in claims processing, with record levels of direct payments and decreased claims inventory.
International Expansion
The company launched its veterinary-first strategy in international markets, introducing the Trupanion brand in Europe, specifically in Germany and Switzerland.
Strong Fourth Quarter Performance
Total revenue for the quarter was $337.3 million, up 14% year-over-year, with subscription business revenue up 19% year-over-year.
Lowlights
Decrease in Average Monthly Retention
Average monthly retention for the trailing 12 months was 98.25%, down from 98.49% the previous year.
Goodwill Impairment Charge
A $5.3 million goodwill impairment charge was recorded related to European businesses due to lower than expected medium-term profits and cash forecasts.
Challenges in Other Business Segment
The other business segment's adjusted operating income was $0.8 million, with a margin down from 2.4% last year, affected by a $0.9 million accounts receivable write-down.
High Inflation Impact
Veterinary inflation remains a challenge, with expectations of continued 15% inflation affecting pricing and margin expansion efforts.
Slower Growth in Other Revenue
Growth in the other business segment is decelerating due to a partner's transition to a new underwriter, leading to no new pet enrollments in certain geographies.
Company Guidance
During the Trupanion Fourth Quarter 2024 earnings call, the company reported significant financial achievements and provided guidance for 2025. Subscription revenue for 2024 grew by 20% year-over-year, contributing to a record adjusted operating income of $114 million, a nearly 40% increase. The company highlighted a strong adjusted operating margin, achieving 15.3% in the subscription business, marking the highest in its history. Trupanion also achieved a milestone of protecting over 1 million cats and dogs, adding approximately 257,000 new pets in the last 12 months. For 2025, Trupanion expects total revenue between $1.379 billion and $1.414 billion, with subscription revenue projected to grow by 14% to 15% on a constant currency basis. They anticipate steady margin expansion and a strategic increase in pet acquisition investment, aiming for improved retention and profit per pet. The company plans to continue leveraging its veterinary lead volume, which increased by 30% year-over-year, to drive future growth.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.