Reasons Why Lemonade (LMND) Stock is an Attractive Pick Now
Lemonade, Inc. LMND should continue to gain from growth in premium placed with third-party insurance companies, interest rates on investment balances and an improvement in the average policy value.
Growth Projections
The Zacks Consensus Estimate for Lemonade’s 2023 and 2024 earnings implies a year-over-year increase of 20.9% and 16%, driven by 59.7% and 17.8% higher revenues of $410.04 million and $483.31 million, respectively.
Earnings Surprise History
Lemonade has a decent surprise history. It beat earnings estimates in three of the last four quarters and missed in one, the average being 10.57%.
Zacks Rank & Price Performance
LMND currently carries a Zacks Rank #2 (Buy). In the past year, the stock has lost 2.9% compared with the industry’s decline of 27%.
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Business Tailwinds
Higher net added customers as well as expansion of geographic footprint and product offerings are likely to boost gross written premium.
In-force premium is likely to have been aided by an increase in customer base as well as an improvement in premium per customer.
Higher prevalence of multiple policies per customer, growth in the overall average policy value and continued shift in the mix of underlying products toward higher value policies are likely to drive premium per customer year.
For the third quarter of 2023, Lemonade expects in-force premium between $703 million and $706 million and gross earned premium in the range of $166-$168 million.
LMND anticipates revenues between $102 million and $104 million for the third quarter of 2023.
For 2023, the company expects in-force premium between $710 million and $715 million and gross earned premium in the band of $654-$658 million.
For 2023, revenues are expected in the range of $402 million to $408 million.
Interest rates on investment balances and lower investment expenses are likely to drive net investment income.
Commission and Other Income is expected to increase on the back of growth on premium placed with third-party insurance companies and higher installment fees billed.
Lemonade boasts a solid capital position. Its existing cash and cash equivalents will be sufficient to meet working capital needs and capital expenditure over at least the next 12 months.
Other Stocks to Consider
Some other top-ranked stocks from the multi-line insurance industry are Old Republic International Corporation ORI, Everest Group, Ltd. EG and Radian Group Inc. RDN. While Old Republic International sports a Zacks Rank #1 (Strong Buy), Everest Group and Radian Group carry a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Old Republic International’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 29.85%.
The Zacks Consensus Estimate for ORI’s 2023 and 2024 earnings has moved 8.3% and 5.2% north, respectively, in the past 60 days. Year to date, the insurer has gained 11.7%.
Everest Group’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 17.36%.
The Zacks Consensus Estimate for EG’s 2023 and 2024 earnings implies 72.7% and 24% year-over-year growth, respectively. Year to date, the insurer has gained 10.8%.
Radian’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 30.88%.
The Zacks Consensus Estimate for RDN’s 2023 and 2024 earnings has moved 5.7% and 4% north, respectively, in the past 60 days. Year to date, the insurer has declined 39.6%.
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Radian Group Inc. (RDN) : Free Stock Analysis Report
Old Republic International Corporation (ORI) : Free Stock Analysis Report
Lemonade, Inc. (LMND) : Free Stock Analysis Report
Everest Group, Ltd. (EG) : Free Stock Analysis Report
