Insurance companies, like Progressive Corporation (PGR) and Palomar Holdings (PLMR), are riding the wave of higher interest rates, causing their stocks to sizzle. With Progressive and Palomar’s stocks surging over 30% this year, investors are eager to dive into why now is the perfect moment to jump on board.
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Rising Earnings Estimates
Progressive and Palomar shine within the top-rated Zacks Insurance-Property and Casualty Industry, ranking in the upper 9% of over 250 Zacks industries. In tandem, positive earnings estimate revisions are propelling these stocks to new heights.
Progressive, a major player in domestic auto insurance, has broadened its services to include homeowner’s insurance, leading to a 15% and 9% surge in EPS estimates for Fiscal Year 2024 and Fiscal Year 2025, respectively.
Palomar, a provider of catastrophe insurance for personal and commercial properties, has experienced a 7% rise in FY24 earnings estimates in the last two months and an 11% spike in FY25 EPS projections.
Intriguing Growth Trajectories
Progressive’s annual earnings are on track to jump an impressive 62% in FY24 to $9.90 per share, projected to continue with a 12% increase in FY25. Sales are expected to rise by 15% this year and an additional 12% in FY25, reaching $80.05 billion.
On the other hand, Palomar anticipates a 16% surge in annual earnings for FY24, followed by an 18% leap in FY25 to $5.06 per share. Sales are forecasted to climb by 24% in FY24 and an astounding 23% in FY25, totaling $572.04 million.
Reasonable Valuations
Despite their meteoric rise this year, Progressive and Palomar are still trading at attractive valuations. Progressive’s stock is trading at 21.3X forward earnings, while Palomar shares are at 19.2X, supported by their growing EPS estimates.
Key Takeaway
The glowing performance of The Progressive Corporation and Palomar Holdings stocks may continue, fueled by the positive streak of earnings estimate revisions. Both companies boast a Zacks Rank #1 (Strong Buy).
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