Even though Palomar Holdings (currently trading at $132.28 per share) has gained 9.8% over the last six months, it has lagged the S&P 500’s 18% return during that period. This may have investors wondering how to approach the situation.
Given the relatively weaker price action, does PLMR warrant a spot on your radar, or is it better left off your list? Find out in our full research report, it’s free.
Why Are We Positive on PLMR?
Founded in 2013 to fill gaps in catastrophe insurance markets, Palomar Holdings (NASDAQ: PLMR) is a specialty insurance provider that offers property and casualty insurance products in underserved markets, with a focus on earthquake coverage.
1. Net Premiums Earned Skyrocket, Fueling Growth Opportunities
Insurers sell policies then use reinsurance (insurance for insurance companies) to protect themselves from large losses. Net premiums earned are therefore what's collected from selling policies less what’s paid to reinsurers as a risk mitigation tool.
Palomar Holdings’s net premiums earned has grown at a 56.8% annualized rate over the last two years, much better than the broader insurance industry and in line with its total revenue.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Palomar Holdings’s EPS grew at 72.1% compounded annual growth rate over the last five years, higher than its 41.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Growing BVPS Reflects Strong Asset Base
Book value per share (BVPS) serves as a key indicator of an insurer’s financial stability, reflecting a company’s ability to maintain adequate capital levels and meet its long-term obligations to policyholders.
Palomar Holdings’s BVPS increased by 20.3% annually over the last five years, and growth has recently accelerated as BVPS grew at an incredible 32.6% annual clip over the past two years (from $21.32 to $37.46 per share).
Final Judgment
These are just a few reasons why we’re bullish on Palomar Holdings. With its shares trailing the market in recent months, the stock trades at 3.3× forward P/B (or $132.28 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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