Palomar may be overvalued with strong growth indicators, but the 6 analysts following the company give it an average rating of buy. The analysts have set target prices ranging from $57.0 to $69.0 per share, for an average of $62.67. At today's price of $53.76, Palomar is trading -14.22% away from its average target price, suggesting there is an analyst consensus of some upside potential.
Palomar Holdings, Inc., an insurance holding company, provides property and casualty insurance to residential and businesses in the United States. Based in La Jolla, CA, the small-cap Finance company has 191 full time employees. Palomar has not offered a dividend during the last year.
Palomar has a trailing twelve month P/E ratio of 21.9, compared to an average of 14.34 for the Finance sector. Based on its EPS guidance of 3.85, the company has a forward P/E ratio of 14.0. Based on the 51.0% compound average growth rate of Palomar's historical and projected earnings per share, the company's PEG ratio is 0.41. This EPS growth rate is likely not sustainable, so will substitute the broader market's 5-year projected EPS growth rate of 11.3%, which gives us a PEG ratio of 1.87. This suggests that these shares are overvalued.
Furthermore, Palomar is likely overvalued compared to its book value, since its P/B ratio of 3.31 is higher than the sector average of 1.57. The company's shares are currently trading 152.7% above their Graham number, implying that they are overvalued in terms of earnings and book value.
If analysts are giving the the company a decent rating despite its hefty price point, it could be related to its strong cash flows. Furthermore, Palomar has wide margins as you can see in the financial summary below.
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (k) | $113,296 | $168,463 | $247,791 | $327,086 |
| Interest Income | -$1,068 | $0 | -$40 | -$873 |
| Net Margins | 9.37% | 3.71% | 18.5% | 15.95% |
| Net Income (k) | $10,621 | $6,257 | $45,847 | $52,170 |
| Depreciation & Amort. | -$216 | -$1,336 | -$3,544 | n/a |
| Earnings Per Share | $0.49 | $0.24 | $1.76 | $2.45 |
| EPS Growth | n/a | -51.02% | 633.33% | 39.2% |
| Diluted Shares (k) | 21,835 | 25,599 | 26,112 | 24,858 |
| Free Cash Flow (k) | $41,585 | $46,351 | $82,949 | n/a |
| Capital Expenditures | -$115 | -$7,200 | -$4,865 | n/a |
