Palomar Holdings (PLMR) AI Stock Analysis

• Market Cap: $3.21B
• Dividend Yield: N/A
• Average Volume (3M): 272.36K
• Price to Earnings (P/E): 16.8
• Beta (1Y): 0.33
• Revenue Growth: 54.41%
• EPS Growth: 52.71%
• Country: US
• Employees: 253
• Sector: Financial
• Sector Strength: 70
• Industry: Insurance - Property & Casualty
• EPS (TTM): 2.24
• Shares Outstanding: 26,501,692
• 10 Day Avg. Volume: 385,192
• 30 Day Avg. Volume: 272,361
• PEG Ratio: 0.30
• Price to Book (P/B): 3.81
• Price to Sales (P/S): 4.10
• P/FCF Ratio: 8.78
• Enterprise Value/Market Cap: 0.97
• Enterprise Value/Revenue: 3.57
• Enterprise Value/Gross Profit: 6.35
• Enterprise Value/Ebitda: 11.78
• 1Y Price Target: $163.67
• Price Target Upside: 32.61% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 77 Outperform
• Price Target: $137.00 ▲(11.00% Upside)
• Action: Reiterated Date: 02/25/26
• Date: Action: Reiterated 02/25/26

PLMR scores well primarily on strong financial performance (expanding margins, solid ROE, and strong cash generation) and supportive earnings-call guidance for continued growth in 2026. The score is tempered by currently weak technical momentum (below key moving averages with negative MACD) and identifiable near-term underwriting/expense headwinds outlined in guidance, while valuation appears reasonable at ~16.8x earnings.

Positive Factors

Strong cash generation

Consistently high operating and free cash flow (~$409M in 2025) implies durable earnings quality and internal funding for growth, reinsurance, and M&A. Strong cash conversion reduces reliance on external capital and supports capital returns or opportunistic investments over the next 2–6 months.

Improving profitability and ROE

Margin expansion and high ROE reflect disciplined underwriting, pricing power in specialty lines, and operating leverage benefits. Sustained profitability supports retained earnings growth, enhances capital adequacy for underwriting appetite, and underpins medium-term return prospects.

Diversification and reinsurance improvements

Broadening into surety and scaling non-earthquake lines reduces concentration risk from earthquake exposure. Concurrently improved quota-share treaties and lower-risk-adjusted catastrophe placements materially lower earnings volatility and strengthen structural margin sustainability.

Negative Factors

Rising loss ratio guidance

A materially higher guided loss ratio signals underwriting profitability is expected to compress as crop and casualty mix grows. Persistently higher loss trends reduce underwriting margins over the medium term and require sustained pricing or portfolio actions to restore prior profitability levels.

Acquisition financing and near-term accretion drag

Financing the acquisition increases interest expense and introduces near-term dilution of accretion. Elevated leverage and financing costs constrain capital flexibility and make near-term ROE gains contingent on successful integration and organic scale benefits realized beyond 2026.

Commercial earthquake rate pressure

Sustained rate softness in a historically meaningful line undermines pricing power and can erode margins if market share is defended. Even with reinsurance gains, prolonged competition in earthquake could limit growth or force higher risk retention to maintain premiums.

Palomar Holdings Business Overview & Revenue Model

Company Description

Palomar 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 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

Strong and improving fundamentals: accelerating revenue growth in 2025 (~12.9%), materially higher profitability (net margin ~22.5%, EBIT margin ~29%), strong ROE (~20.9%), and excellent cash conversion with rising operating/free cash flow (~$409M in 2025). Main risks are uneven year-to-year growth and notable swings in total assets that reduce perceived balance-sheet stability.

Income Statement

Revenue growth has been consistently positive and accelerated in the latest year (2025: ~12.9% vs. 2024: ~0.5%), while profitability strengthened meaningfully over time. Net profit margin improved from ~3.7% (2020) to ~22.5% (2025), and operating profitability expanded as well (2025 EBIT margin ~29%). The main watch-out is that growth has been uneven year-to-year (notably the sharp slowdown in 2024), which adds some variability to the near-term trajectory.

Balance Sheet

The balance sheet is conservatively positioned with minimal leverage: total debt is reported at 0 in 2024–2025, and debt-to-equity is 0.0 in those periods (modest debt in 2022–2023). Shareholders’ equity has grown (to ~$943M in 2025), supporting a strong return on equity (~20.9% in 2025). A key weakness is that total assets swung sharply higher in 2024 (~$2.26B) and then much lower in 2025 (~$1.02B), which suggests meaningful balance sheet mix/size changes and reduces the appearance of stability based on the provided data.

Cash Flow

Cash generation is strong and improving: operating cash flow rose to ~$409M in 2025 (from ~$261M in 2024), and free cash flow closely tracks operating cash flow (2025 free cash flow ~$409M). Free cash flow also closely matches reported earnings (free cash flow to net income ~1.00 in 2024–2025), indicating high earnings quality and strong cash conversion. The main drawback is some historical volatility (free cash flow declined in 2023), even though the most recent two years show clear momentum.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	875.97M	553.86M	375.93M	327.09M	247.79M
Gross Profit	647.37M	269.45M	195.59M	137.64M	110.90M
EBITDA	262.65M	157.44M	111.92M	72.54M	60.72M
Net Income	197.07M	117.57M	79.20M	52.17M	45.85M
Balance Sheet
Total Assets	1.02B	2.26B	1.71B	1.31B	925.73M
Cash, Cash Equivalents and Short-Term Investments	106.89M	550.86M	695.35M	583.17M	482.97M
Total Debt	0.00	0.00	52.60M	36.40M	3.47M
Total Liabilities	1.28B	1.53B	1.24B	921.70M	531.57M
Stockholders Equity	942.67M	729.03M	471.25M	384.75M	394.17M
Cash Flow
Free Cash Flow	408.98M	260.91M	109.35M	163.65M	82.96M
Operating Cash Flow	409.12M	261.16M	116.11M	169.58M	87.81M
Investing Cash Flow	-353.98M	-306.24M	-128.48M	-156.81M	-58.19M
Financing Cash Flow	-28.79M	73.77M	-3.94M	5.02M	-13.04M

Palomar Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 123.42
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 123.42 is below the 20-day moving average (MA) of 125.22, below the 50-day MA of 128.57, and below the 200-day MA of 131.48, indicating a bearish trend. The MACD of -1.24 indicates Positive momentum. The RSI at 41.41 is Neutral, neither overbought nor oversold. The STOCH value of 19.24 is Positive, 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
HCI	78 Outperform	$2.03B	9.79	31.94%	0.82%	8.71%	17.26%
PLMR	77 Outperform	$3.21B	16.83	23.58%	―	54.41%	52.71%
AHL	73 Outperform	$3.44B	―	13.97%	―	―	―
ROOT	70 Neutral	$896.21M	18.54	17.02%	―	38.50%	―
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
LMND	60 Neutral	$3.90B	-21.98	-31.34%	―	30.53%	21.82%
KMPR	56 Neutral	$1.83B	13.45	9.03%	3.15%	4.51%	-8.29%

Palomar Holdings Corporate Events

Palomar Highlights Strong Q4 Results and Gray Surety Acquisition

On February 23, 2026, Palomar Holdings, Inc. updated its investor presentation, highlighting fourth-quarter gross written premium of $492.6 million, up 31.8% year on year, and adjusted net income of $61.1 million, a 48% gain that translated into a 26.9% adjusted return on equity and a 73.4% adjusted combined ratio. The company also noted its January 31, 2026 closing of the Gray Surety acquisition, which adds expertise and scale in surety and credit and would have represented about 7% of total gross written premium for full-year 2025 on a pro forma basis.

Palomar emphasized that its non-earthquake business now represents 72% of its specialty premium base, underscoring a deliberate shift toward a more diversified mix that preserves profitability while reducing dependence on a single catastrophe line. The presentation detailed responsible growth in casualty with conservative reserving, increased crop retention to 50% starting January 1, 2026, and a broad, multi-layered reinsurance program that expands earthquake coverage to roughly $3.5 billion while maintaining a $20 million occurrence retention, factors the company argues have helped it beat earnings consensus for 14 consecutive quarters and should continue to support stable margins and long-term value creation for stakeholders.

The most recent analyst rating on (PLMR) stock is a Buy with a $160.00 price target. To see the full list of analyst forecasts on Palomar Holdings stock, see the PLMR Stock Forecast page.

Palomar Holdings completes Gray Surety acquisition and financing

On February 2, 2025, Palomar Holdings announced it had completed the acquisition of The Gray Casualty & Surety Company, effective January 31, 2026, and closed a new $450 million unsecured credit facility, effective January 27, 2026, consisting of a $150 million revolving line and a $300 million term loan arranged by a syndicate of major U.S. banks. The approximately $311 million purchase price for Gray Surety was funded with proceeds from the term loan and cash on hand, a move that significantly expands Palomar’s national surety platform, adds scale and geographic reach to its casualty franchise, and supports its broader “Palomar 2x” growth strategy while underscoring the company’s ability to secure substantial long-term financing for acquisitions and general corporate purposes.

The most recent analyst rating on (PLMR) stock is a Buy with a $139.00 price target. To see the full list of analyst forecasts on Palomar Holdings stock, see the PLMR Stock Forecast page.