It has been about a month since the last earnings report for Palomar (PLMR). Shares have added about 8.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Palomar due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Palomar Holdings, Inc. before we dive into how investors and analysts have reacted as of late.
Palomar Q2 Earnings, Revenues Top Estimates, Premiums Rise Y/Y
Palomar Holdings Inc. reported second-quarter 2025 operating income of $1.76 per share, which beat the Zacks Consensus Estimate by 4.7%. The bottom line increased 40.8% year over year. The quarter’s results benefited from the successful execution of Palomar 2X strategy, improved premiums and net investment income, higher yields on invested assets and solid underwriting income, offset by higher expenses.
Behind the Headlines
Total revenues improved 48.9% year over year to $195 million, mainly attributable to higher premiums and net investment income. The top line beat the Zacks Consensus Estimate by 4.7%. Gross written premiums increased 28.8% year over year to $496.3 million. Our estimate was $558.2 million. Net earned premiums increased 47.2% year over year to $164 million. Our estimate was $172.4 million. The Zacks Consensus Estimate was pegged at $160 million.
Net investment income surged 68% year over year to $13.4 million. The increase was primarily driven by higher yields on invested assets and a higher average balance of investments held during the three months ended June 30, 2025 due to cash generated from operations and proceeds from the August 2024 public offering. The Zacks Consensus Estimate was pegged at $11.2 million. Our estimate was $9.6 million.
Palomar Holdings recorded an underwriting income of $38.3 million, up 49.5% year over year. Adjusted underwriting income was nearly $48.4 million, up 47.1% year over year.
Total expenses of $143.3 million increased 46.8% year over year due to higher loss and loss adjustment expenses, acquisition expenses and other underwriting expenses. Our estimate was $136.9 million.
The loss ratio was 25.7, which deteriorated 80 basis points (bps) year over year. Our estimate was 35.5. The Zacks Consensus Estimate was pegged at 26.9.
Adjusted combined ratio, excluding catastrophe losses, was 73.1, which deteriorated 280 bps year over year. The Zacks Consensus Estimate was pegged at 73.
Financial Update
Cash and cash equivalents increased 1.1% from 2024-end to $81.3 million at second-quarter 2025-end. Shareholder equity increased 16.2% from 2024-end to $847.7 million at the end of the second quarter. Annualized adjusted return on equity in the second quarter of 2025 was 23.7%, contracting 100 bps year over year.
Capital Deployment
The board of directors approved a $150 million share repurchase program effective July 31, 2025 through July 31, 2027.
2025 View
Palomar Holdings aims to achieve adjusted net income of $198 million to $205 million, up from PLMR’s initial outlook of adjusted net income of $186 million to $200 million. This range includes an estimate of $8 million to $12 million of catastrophe losses for the remainder of the year.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Palomar has a nice Growth Score of B, a score with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Palomar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Palomar belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, NMI Holdings (NMIH), has gained 3.6% over the past month. More than a month has passed since the company reported results for the quarter ended June 2025.
NMI Holdings reported revenues of $173.78 million in the last reported quarter, representing a year-over-year change of +7.2%. EPS of $1.22 for the same period compares with $1.20 a year ago.
NMI Holdings is expected to post earnings of $1.20 per share for the current quarter, representing a year-over-year change of +4.4%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for NMI Holdings. Also, the stock has a VGM Score of C.
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Palomar Holdings, Inc. (PLMR): Free Stock Analysis Report NMI Holdings Inc (NMIH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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