Stock price when the opinion was issued
The company is small at $900M, even with a double this year, but priced very well at 8X earnings. Q1 earnings were very strong, and resulted in multiple broker upgrades. The balance sheet has net cash, and good earnings growth is expected over the next two years. It has lost money in prior years, and earnings can be volatile. Insiders own 15% and have been net buyers this year. Overall, it looks quite good to us for a small cap in the insurance sector.
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The insurance provider recently reported their best quarterly earnings in Q4. The company estimates up to $40 million in losses due to the California wildfires in Q1 2025. We like that cash reserves are growing. The stock trades at 5x earnings, 1.3x book and and supports a ROE of 33%. We recommend setting a stop-loss at $8, looking to achieve $16 -- upside potential of 22%. Yield 0.9%
(Analysts’ price target is $16.00)