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Palomar Holdings Inc (PLMR)
NASDAQ:PLMR
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Palomar Holdings (PLMR) AI Stock Analysis

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PLMR

Palomar Holdings

(NASDAQ:PLMR)

Rating:83Outperform
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
Financial Performance
The company's earnings per share outperformed expectations, indicating strong financial performance.
Growth Prospects
Palomar Holdings is expected to grow at a healthy pace, with near-term growth likely trending above 20% due to new business lines and stable reinsurance costs.
Reinsurance Strategy
Palomar Holdings' strategy of exiting wind-exposed lines has reduced underwriting volatility and improved reinsurance cost management.
Negative Factors
Earthquake Segment
Growth in the earthquake segment decelerated significantly, which could be a concern for some investors.
Segment Growth Concerns
Slower growth in commercial earthquake insurance is a headwind, impacting Palomar Holdings' earnings significantly due to its higher reinsurance leverage and underwriting margins.

Palomar Holdings (PLMR) vs. SPDR S&P 500 ETF (SPY)

Palomar Holdings Business Overview & Revenue Model

Company DescriptionPalomar 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 MoneyPalomar 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 Earnings Call Summary

Earnings Call Date:Aug 04, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant achievements in terms of revenue growth, strategic positioning, and financial performance with several segments showing robust expansion. Despite some challenges such as increased competition in the commercial earthquake market and a decline in fronting premiums, the company's strong overall performance and strategic initiatives like the share repurchase program and raised guidance reflect a positive outlook.
Q2-2025 Updates
Positive Updates
Exceptional Top Line and Bottom Line Growth
Achieved exceptional top line growth of 29% (45% on a same-store basis) and strong bottom line growth with adjusted net income increasing 52% year-over-year.
Strong Financial Metrics
Generated an adjusted combined ratio of 73% and a 24% adjusted return on equity.
Earthquake Franchise Performance
Gross written premium growth of 9% year-over-year in the Earthquake franchise with 87% policy retention and 10% inflation guard on the existing book.
Inland Marine and Other Property Growth
Category grew 28% year-over-year, with residential builders risk products performing well, growing 52% in the quarter.
Casualty Segment Growth
Casualty segment experienced strong growth with gross written premium increasing 119% year-over-year.
Crop Franchise Expansion
Generated $39 million of written premium compared to $2.2 million in the prior year period, with confidence in attaining a $200 million premium target for the year.
Reinsurance Program Success
Completed the placement of June 1 core excess of loss treaty, achieving a 10% risk-adjusted rate decrease.
Share Repurchase Program
Board authorized a 2-year $150 million share repurchase program.
Raised Guidance for 2025
Raised 2025 adjusted net income guidance to $198 million to $208 million, with a midpoint implying an adjusted ROE of 24%.
Negative Updates
Competitive Commercial Earthquake Market
Increased competition in Commercial Earthquake, most notably in large commercial accounts, which saw an average rate decrease above 20%.
Fronting Premium Decline
Fronting premium declined 38% year-over-year, reflecting the final full quarter of impact from the conclusion of the partnership with Omaha National.
Elevated Loss Ratio in Q2
Accident year loss ratio ex-cat increased to 29.4% from 26.6% in Q1, primarily driven by mix changes and earlier-than-expected Crop premium.
Company Guidance
During the second quarter of 2025, Palomar Holdings reported impressive financial results, showcasing a 29% increase in gross written premiums, with a significant 45% growth on a same-store basis. The company's adjusted net income surged by 52% year-over-year, reaching $48.5 million, or $1.76 per share. The adjusted combined ratio was maintained at 73.1%, while the annualized adjusted return on equity stood at 23.7%. Palomar's strategic initiatives were highlighted, including the successful execution of reinsurance placements that led to a 10% risk-adjusted rate decrease. The earthquake franchise displayed a steady 9% growth in gross written premiums, supported by strong policy retention of 87% and a 10% inflation guard. Inland Marine and other property categories grew by 28%, driven by residential lines, while the Crop business reported $39 million in written premium, benefiting from favorable weather conditions. The company's guidance for 2025 adjusted net income was raised to a range of $198 million to $208 million, reflecting a midpoint implying an adjusted ROE of 24%.

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
85
Very Positive
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
75
Positive
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
80
Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue682.09M553.86M375.93M327.09M247.79M168.46M
Gross Profit496.91M269.45M195.59M327.09M110.90M168.46M
EBITDA197.33M157.44M111.92M72.54M60.68M7.56M
Net Income154.91M117.57M79.20M52.17M45.85M6.26M
Balance Sheet
Total Assets2.83B2.26B1.71B1.30B925.73M729.09M
Cash, Cash Equivalents and Short-Term Investments1.19B149.26M51.55M583.17M482.97M431.52M
Total Debt0.000.0052.60M36.40M2.19M0.00
Total Liabilities1.99B1.53B1.24B914.06M531.57M365.38M
Stockholders Equity847.20M729.03M471.25M384.75M394.17M363.71M
Cash Flow
Free Cash Flow373.53M260.91M109.35M163.65M82.96M49.48M
Operating Cash Flow380.97M261.16M116.11M169.58M87.81M53.55M
Investing Cash Flow-473.94M-306.24M-128.48M-156.81M-58.19M-181.44M
Financing Cash Flow126.27M73.77M-3.94M5.02M-13.04M128.33M

Palomar Holdings Technical Analysis

Technical Analysis Sentiment
Negative
Last Price123.20
Price Trends
50DMA
131.74
Negative
100DMA
144.74
Negative
200DMA
130.83
Negative
Market Momentum
MACD
-2.03
Negative
RSI
45.04
Neutral
STOCH
49.05
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 123.2 is above the 20-day moving average (MA) of 122.87, below the 50-day MA of 131.74, and below the 200-day MA of 130.83, indicating a neutral trend. The MACD of -2.03 indicates Negative momentum. The RSI at 45.04 is Neutral, neither overbought nor oversold. The STOCH value of 49.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PLMR.

Palomar Holdings Risk Analysis

Palomar Holdings disclosed 53 risk factors in its most recent earnings report. Palomar Holdings reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Palomar Holdings Peers Comparison

Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
83
Outperform
$3.38B21.6622.45%52.60%50.69%
79
Outperform
$4.37B10.9321.56%1.64%14.93%22.19%
79
Outperform
$2.07B16.1516.20%22.20%5.78%
74
Outperform
$3.93B57.3512.70%17.25%-11.72%
68
Neutral
$18.06B11.9710.24%3.74%9.75%1.30%
58
Neutral
$3.40B10.1612.21%2.35%2.75%572.22%
55
Neutral
$3.75B-35.10%22.91%4.95%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PLMR
Palomar Holdings
123.20
27.50
28.74%
MCY
Mercury General
77.43
18.25
30.84%
KMPR
Kemper
53.97
-5.15
-8.71%
LMND
Lemonade
50.25
32.11
177.01%
HGTY
Hagerty Inc Class A
11.78
0.45
3.97%
SKWD
Skyward Specialty Insurance Group, Inc.
50.23
8.02
19.00%

Palomar Holdings Corporate Events

Executive/Board Changes
Palomar Holdings Extends CEO Mac Armstrong’s Term
Positive
Dec 30, 2024

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Apr 10, 2025