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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We reiterate HRTG as a TOP PICK. Since emerging from last year's California fires, this insurance company has weathered the loss remarkably well. Latest earnings showed EPS doubled over the year. It trades at 10x earnings, 2.3x book and supports a ROE of 27%. We recommend scaling up the stop (from $14.00) to $15.50, looking to achieve $29.00 -- upside potential of 16%. Yield 0%
(Analysts’ price target is $29.00)