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HomeValue stockGrowth Investing101: Palomar Holdings, Inc (PLMR)

Growth Investing101: Palomar Holdings, Inc (PLMR)

Company Overview:

  • Palomar Holdings, Inc. is a specialized insurance provider operating in the United States, catering to both residential and commercial clients.
  • Its range of insurance products covers various aspects of property and casualty, including earthquake, fronting, commercial all risk, specialty homeowners, inland marine, Hawaii hurricane, and residential flood insurance.
  • The company also engages in assumed reinsurance, extending its services beyond direct insurance offerings.
  • Established in 2013 and headquartered in La Jolla, California, the company was previously known as GC Palomar Holdings before rebranding to its current name.
  • These are the main five categories in which the company operates its business.

Why Palomar (PLMR) appears to be a Sound Investment :

  • The company’s robust net margin stands at approximately 21.78%.
  • The company provided positive guidance for 2024, anticipating an increase in Adjusted Net Income to a range of $110 to $115 million.
  • The company aims to use a natural approach to double underwriting income and maintain a Return on Equity (ROE) over 20% in the near future.
  • The company boasts a healthy free cash flow per share of $4.41.
  •  Palomar stands out as one of the selected 13 insurance providers authorized by the federal government. It grants entry into the lucrative $20 billion annual Crop insurance market.
  • The company’s Return on Capital (ROIC) stands at 16.70%.
  • The annual gross premium written by the company shows a consistent year-over-year increase.

Risk Factors:

  • Unforeseeable and severe catastrophe events, including those related to global climate change, could drastically reduce our earnings, stockholders’ equity, and ability to underwrite new insurance policies.
  • With a P/E ratio of 24.27 and an EV/EBIT ratio of 17.62, the company’s valuation appears relatively high.

Chart:

= The current price of the stock is up by 69% compared to its value one year ago.

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