Palomar Holdings (PLMR) AI Stock Analysis

• Market Cap: $4.10B
• Dividend Yield: N/A
• Average Volume (3M): 276.68K
• Price to Earnings (P/E): 30.8
• Beta (1Y): 0.62
• Revenue Growth: 46.90%
• EPS Growth: 43.99%
• Country: US
• Employees: 253
• Sector: Financial
• Sector Strength: 79
• Industry: Insurance - Property & Casualty
• EPS (TTM): 1.87
• Shares Outstanding: 26,742,142
• 10 Day Avg. Volume: 286,923
• 30 Day Avg. Volume: 276,682
• PEG Ratio: 1.46
• Price to Book (P/B): 2.96
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 6.97
• Enterprise Value/Market Cap: 0.27
• Enterprise Value/Revenue: 0.52
• Enterprise Value/Gross Profit: 2.11
• Enterprise Value/Ebitda: 2.28
• 1Y Price Target: $181.80
• Price Target Upside: 17.86% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 8

• Rating: 83 Outperform
• Price Target: ―

Palomar Holdings exhibits strong financial and technical performance with significant revenue growth and a bullish technical outlook. These positive factors are slightly offset by a high P/E ratio and the challenges discussed in the earnings call, such as the impact of wildfires on the California insurance market. Overall, the company's strategic growth initiatives and strong equity position underpin a solid stock performance outlook.

Positive Factors

Earnings

Palomar reported its tenth consecutive earnings beat in the first quarter with operating EPS of $1.87 vs. consensus at $1.59.

Financial Performance

The company's major renewal completed better than prior guidance with pricing down 10% and with greater coverage secured.

Growth Outlook

The growth outlook across product offerings is robust given Palomar's low penetration, favorable rate environment across many lines, and opportunities to expand geographically with recent personnel investments.

Negative Factors

Competitive Pressure

Management remains confident in mid-to-high teens growth in 2025 despite competitive pressure.

Fronting Business Decline

Top-line growth reached 20% even though the fronting business declined more than 40% year-over-year, but all other lines showed relative strength.

Market Conditions

Palomar is a specialty insurer with a competitive advantage in underserved markets due to its access to admitted and surplus lines paper.

Palomar Holdings Business Overview & Revenue Model

Company Description

Palomar Holdings, Inc. (PLMR) is a specialty insurance company that focuses on providing tailored insurance products to underserved markets in the United States. The company primarily operates in the property and casualty insurance sectors, offering specialty insurance coverage for earthquakes, hurricanes, and other catastrophic events. Palomar Holdings aims to deliver innovative solutions and superior service to their clients through a combination of proprietary analytics, differentiated underwriting, and a diversified risk management strategy.

How the Company Makes Money

Palomar 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 showcases strong financial health with substantial revenue and net income growth, a solid balance sheet, and robust cash flow generation. However, the absence of EBIT and EBITDA figures in 2024 and fluctuating total assets warrant caution. The company's strong equity position and consistent cash flow performance provide a solid foundation for future growth.

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.

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.

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	610.17M	553.86M	375.93M	327.09M	247.79M	168.46M
Gross Profit	524.66M	553.86M	375.93M	327.09M	247.79M	168.46M
EBITDA	132.76M	152.33M	111.92M	72.54M	60.68M	7.56M
Net Income	134.11M	117.57M	79.20M	52.17M	45.85M	6.26M
Balance Sheet
Total Assets	2.43B	829.77M	1.71B	1.30B	925.73M	729.09M
Cash, Cash Equivalents and Short-Term Investments	1.11B	149.26M	51.55M	583.17M	482.97M	431.52M
Total Debt	0.00	0.00	52.60M	36.40M	2.19M	0.00
Total Liabilities	1.64B	1.53B	1.24B	914.06M	531.57M	365.38M
Stockholders Equity	790.45M	729.03M	471.25M	384.75M	394.17M	363.71M
Cash Flow
Free Cash Flow	307.95M	260.91M	109.35M	163.65M	82.96M	49.48M
Operating Cash Flow	315.21M	261.16M	116.11M	169.58M	87.81M	53.55M
Investing Cash Flow	-341.86M	-306.24M	-128.48M	-156.81M	-58.19M	-181.44M
Financing Cash Flow	84.20M	73.77M	-3.94M	5.02M	-13.04M	128.33M

Palomar Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 154.25
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PLMR, the sentiment is Negative. The current price of 154.25 is below the 20-day moving average (MA) of 161.06, below the 50-day MA of 157.86, and above the 200-day MA of 122.68, indicating a neutral trend. The MACD of -1.48 indicates Positive momentum. The RSI at 43.80 is Neutral, neither overbought nor oversold. The STOCH value of 36.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PLMR.

Palomar Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PLMR	83 Outperform	$4.10B	30.80	20.76%	―	46.90%	43.99%
SKWD	79 Outperform	$2.30B	19.31	16.03%	―	25.88%	9.45%
MCY	75 Outperform	$3.66B	12.78	16.71%	1.92%	16.64%	33.06%
HGTY	73 Outperform	$3.48B	47.76	12.50%	―	17.56%	29.28%
LMND	61 Neutral	$3.08B	―	-35.57%	―	21.44%	2.99%
Sector *	60 Neutral	C$14.55B	5.36	20.17%	6.08%	26.88%	-38.18%
KMPR	58 Neutral	$4.10B	11.99	12.57%	2.00%	-6.08%	―

Palomar Holdings Corporate Events

Palomar Holdings Extends CEO Mac Armstrong’s Term

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.