Here's Why Investors Should Retain EverQuote (EVER) Stock Now
EverQuote, Inc. EVER is well-poised to grow from reduced operating expenses, enhancement of its platform via machine learning and artificial intelligence and expected recovery in the auto insurance business. The company’s results should also benefit from increasing traffic volumes and a robust capital position.
Zacks Rank & Price Performance
EVER currently carries a Zacks Rank #3 (Hold). In the past month, the stock has lost 10.6% against the industry’s growth of 2.5%.
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Rising Estimates
The Zacks Consensus Estimate for EverQuote’s next year earnings implies a year-over-year increase of 37.2%, driven by 2.3% higher revenues of $300.6 million.
EverQuote has a decent earnings surprise history. The company’s bottom line beat estimates in each of the last four quarters, the average being 29.7%.
Key Drivers
EverQuote does not shy away from divesting unprofitable or capital-heavy businesses to focus on core operations. The company exited its health and Medicare business due to low capital efficiency and significant cash consumption. Due to this move, EverQuote will be able to invest in more capital-efficient businesses, like the property and casualty business, which continues to pose opportunities for the company to capitalize on. This would create value for shareholders in the future.
Variable marketing margin (VMM) is likely to gain from declining customer acquisition costs and a shift of revenue mix to local agent networks with higher VMM. The company also decided to reduce its non-marketing operating expenses by 15%. This is expected to drive an improvement in the VMM operating point for the business.
Increasing consumer traffic, higher quote request volume and innovating advertiser products and services will continue to boost revenues.
EverQuote boasts a debt-free balance sheet with cash balance improving over the last three years. The insurer aims to meet any future debt service obligations with the existing cash and cash equivalents and cash flows from operations, which are expected to be sufficient to fund operating expenses and capital expenditure requirements for at least the next 12 months, without considering liquidity available from the revolving line of credit.
However, EverQuote's top line has been decreasing over the past few quarters owing to the auto insurance downturn since 2021. The company expects revenues to be between $51 million and $56 million in the third quarter, implying a year-over-year decline of 48% from the midpoint. However, EverQuote’s expectation of insurance premium increases improving the profitability of insurance carriers should fuel its top-line growth in the near future due to increased demand for customer acquisition. Moreover, the cost of claims shows signs of stabilization, improving the prospects for EverQuote and the auto insurance industry.
Stocks to Consider
Some better-ranked stocks in the Finance space are Fidus Investment Corporation FDUS, New Mountain Finance Corporation NMFC and Invesco Mortgage Capital Inc. IVR. Fidus Investment and New Mountain Finance presently sport a Zacks Rank #1 (Strong Buy), and Invesco Mortgage currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fidus Investment’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.52%. The Zacks Consensus Estimate for FDUS’s 2023 earnings suggests an improvement of 30.3%, while the same for revenues suggests growth of 35.4% from the corresponding year-ago reported figures. The consensus mark for FDUS’s 2023 earnings has moved 5.6% north in the past seven days.
New Mountain Finance’s earnings surpassed estimates in two of the trailing four quarters and matched the mark twice, the average surprise being 2.20%. The Zacks Consensus Estimate for NMFC’s 2023 earnings suggests an improvement of 23.4%, while the same for revenues suggests growth of 28.8% from the corresponding year-ago reported figures. The consensus mark for NMFC’s 2023 earnings has moved 3.3% north in the past 30 days.
The bottom line of Invesco Mortgage outpaced estimates in each of the last four quarters, the average surprise being 54.24%. The Zacks Consensus Estimate for IVR’s 2023 earnings suggests an improvement of 1.1% from the year-ago reported figure. The consensus mark for IVR’s 2023 earnings has moved 18.4% north in the past seven days.
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INVESCO MORTGAGE CAPITAL INC (IVR) : Free Stock Analysis Report
EverQuote, Inc. (EVER) : Free Stock Analysis Report
New Mountain Finance Corporation (NMFC) : Free Stock Analysis Report
Fidus Investment Corporation (FDUS) : Free Stock Analysis Report
