Palomar Holdings (PLMR) AI Stock Analysis

• Market Cap: $3.39B
• Dividend Yield: N/A
• Average Volume (3M): 269.29K
• Price to Earnings (P/E): 17.2
• Beta (1Y): 0.35
• 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: 399,527
• 30 Day Avg. Volume: 269,291
• PEG Ratio: 0.51
• Price to Book (P/B): 3.70
• Price to Sales (P/S): 4.87
• P/FCF Ratio: 10.33
• Enterprise Value/Market Cap: 0.91
• Enterprise Value/Revenue: 3.99
• Enterprise Value/Gross Profit: 8.02
• Enterprise Value/Ebitda: 13.66
• 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: 78 Outperform
• Price Target: $141.00 ▲(14.24% Upside)
• Action: Reiterated Date: 02/02/26
• Date: Action: Reiterated 02/02/26

PLMR scores well primarily on strong financial performance (profitability, cash generation, and zero-debt balance sheet) and a very upbeat earnings outlook with raised guidance and strong underwriting metrics. The main offset is weaker near-term technical momentum (below key moving averages with negative MACD), while valuation appears reasonable based on its P/E.

Positive Factors

Balance Sheet Strength

Palomar’s zero-debt capital structure and expanding equity base materially reduce financial risk and increase strategic optionality. With no legacy leverage, the company can support underwriting volatility, fund organic growth or acquisitions, and maintain solvency through loss cycles.

Underwriting Profitability

A 75% adjusted combined ratio and ~26% adjusted ROE signal disciplined underwriting and pricing across specialty lines. Sustained underwriting profitability generates durable surplus and supports reinvestment in niche products and distribution, underpinning long-term earnings quality.

Cash Generation Quality

Free cash flow near reported net income indicates high earnings quality and internal funding capacity. Strong cash conversion supports dividends, reinsurance purchases, and M&A funding without depending solely on external capital, improving resilience across insurance cycles.

Negative Factors

Rate Pressure in Commercial Earthquake

An 18% decline in risk-adjusted pricing in commercial earthquake is a structural headwind for a concentrated specialty line. Prolonged pricing compression can erode underwriting margins, force stricter risk selection or higher reinsurance spend, and raise volatility in long-term profitability.

Decline in Fronting Premiums

A 32% drop in fronting premium from partner termination reduces stable fee income and distribution scale. Loss of fronting capacity can impair diversification and predictable earnings, requiring replacement arrangements or higher capital deployment to maintain similar premium growth.

Post-Acquisition Leverage Increase

Palomar moved from zero debt to a $450M unsecured facility and term loan to fund Gray Surety, materially changing capital structure. Increased leverage raises interest expense and reduces capital buffers for catastrophe losses, constraining flexibility relative to prior zero-debt policy.

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 multi-year growth and profitability with high-quality earnings (TTM net margin ~22.6%, EBIT margin ~20.4%) and a very conservative capital structure (zero debt, strong ROE ~21.7%). Offsets include signs of recent margin variability versus 2024 and some volatility in cash-flow conversion metrics despite solid TTM free cash flow.

Income Statement

PLMR shows strong top-line momentum and profitability. Revenue increased to $776.0M in TTM (Trailing-Twelve-Months), up 14.17%, following a multi-year expansion (2020–2024 revenue grew from $168.5M to $553.9M). Profitability is solid with TTM net margin of ~22.6% and EBIT margin of ~20.4%. The main watch-out is margin variability versus 2024 (TTM gross margin is lower than 2024), suggesting underwriting/claims and/or pricing dynamics may be less favorable recently even as earnings remain strong.

Balance Sheet

Balance sheet quality is a key strength, highlighted by zero total debt in both TTM (Trailing-Twelve-Months) and 2024 and a 0.0 debt-to-equity ratio, implying low financial risk and strong flexibility. Equity has grown to $878.1M (TTM) alongside asset growth to $2.94B, indicating scale-up with expanding capital. Returns are also attractive: TTM return on equity is ~21.7% (up from ~16.1% in 2024). A potential limitation is that the balance sheet data provided does not include liquidity detail (e.g., cash/investments vs. insurance liabilities), so the assessment is driven primarily by leverage and equity returns.

Cash Flow

Cash generation is strong, with TTM operating cash flow of $364.3M and free cash flow of $358.3M, and free cash flow running near net income (TTM free cash flow to net income ~0.98), which supports earnings quality. Free cash flow dipped modestly in TTM (growth of -4.073%), indicating some near-term pressure despite higher revenue and earnings. Operating cash flow coverage is extremely high in TTM, but it has been inconsistent across years (e.g., below 1.0 in 2023–2024), suggesting working-capital and timing effects can create volatility even when underlying profitability is healthy.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	775.96M	553.86M	375.93M	327.09M	247.79M	168.46M
Gross Profit	386.11M	269.45M	195.59M	137.64M	110.90M	40.31M
EBITDA	226.79M	157.44M	111.92M	72.54M	60.72M	7.56M
Net Income	175.87M	117.57M	79.20M	52.17M	45.85M	6.26M
Balance Sheet
Total Assets	2.94B	2.26B	1.71B	1.31B	925.73M	729.09M
Cash, Cash Equivalents and Short-Term Investments	1.25B	550.86M	695.35M	583.17M	482.97M	431.52M
Total Debt	0.00	0.00	52.60M	36.40M	0.00	0.00
Total Liabilities	2.07B	1.53B	1.24B	921.70M	531.57M	365.38M
Stockholders Equity	878.11M	729.03M	471.25M	384.75M	394.17M	363.71M
Cash Flow
Free Cash Flow	358.31M	260.91M	109.35M	163.65M	82.96M	49.48M
Operating Cash Flow	364.34M	261.16M	116.11M	169.58M	87.81M	53.55M
Investing Cash Flow	-311.80M	-306.24M	-128.48M	-156.81M	-58.19M	-181.44M
Financing Cash Flow	-27.37M	73.77M	-3.94M	5.02M	-13.04M	128.33M

Palomar Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 123.42
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 123.42 is below the 20-day moving average (MA) of 125.52, below the 50-day MA of 128.53, and below the 200-day MA of 131.66, indicating a bearish trend. The MACD of -0.94 indicates Positive momentum. The RSI at 41.07 is Neutral, neither overbought nor oversold. The STOCH value of 23.46 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	78 Outperform	$3.39B	17.18	23.58%	―	54.41%	52.71%
HCI	78 Outperform	$2.04B	10.05	31.94%	0.82%	8.71%	17.26%
AHL	73 Outperform	$3.44B	―	13.97%	―	―	―
ROOT	70 Neutral	$979.93M	19.75	17.02%	―	38.50%	―
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
LMND	60 Neutral	$4.91B	-25.96	-31.34%	―	30.53%	21.82%
KMPR	56 Neutral	$1.93B	14.38	9.03%	3.15%	4.51%	-8.29%

Palomar Holdings Corporate Events

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.