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Palomar (PLMR) Shares Up on New $40M Share Buyback Program

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·3 min read
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Palomar Holdings’ PLMR shares gained 1.7% in the last two trading sessions as the board of directors authorized a share buyback program to return more value to investors. The latest authorization will allow the company to spend up to $40 million to repurchase its common stock through Mar 31, 2023.

Backed by a sustained operational performance, Palomar has maintained a solid capital position. Its cash and cash equivalents witnessed a two-year CAGR (2017-2020) of 45.9%. This suggests that the company has sufficient cash reserves to ensure financial stability.

It exited 2020 with 25.6 million shares outstanding, up 17.2% from the 2019 end level. Share repurchases benefit the company’s earnings per share, book value and shareholder equity by reducing shares outstanding.

Palomar has a track record of delivering solid growth and sustained profitability. The company strives to protect earnings and the balance sheet with reinsurance program that mitigates the impact of major events on overall profitability. This specialty insurer remains focused on addressing underserved, mispriced markets with a compelling portfolio.

Hence, we remain optimistic about Palomar’s efforts in further improving capital and liquidity position that will not only allow the company to return more value to investors but also accelerate near-term growth.

Palomar affirmed adjusted net income between $62 million and $67 million for 2021. It believes 2021 premium growth rate will be at a level similar to that of 2020.

Shares of the Zacks Rank #3 (Hold) company have rallied 23.1% year to date, underperforming the industry’s 34.3% growth. Focus on new business, strong premium retention rates for the existing business and renewals of existing policies bode well for Palomar to drive its shares in the near term.

Stocks to Consider

Some better-ranked stocks from the same space include Markel MKL, Cincinnati Financial CNA and Alleghany Y.

Markel delivered an earnings surprise of 75.1% in the last reported quarter. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CincinnatiFinancial delivered an earnings surprise of 37.6% in the last reported quarter. It carries a Zacks Rank #2 (Buy).

Alleghany delivered an earnings surprise of 48.8% in the last reported quarter. It carries a Zacks Rank #2.

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Palomar Holdings, Inc. (PLMR) : Free Stock Analysis Report

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