A strong stock as of late has been HCI Group (HCI). Shares have been marching higher, with the stock up 12.5% over the past month. The stock hit a new 52-week high of $187.57 in the previous session. HCI Group has gained 61% since the start of the year compared to the 14.4% gain for the Zacks Finance sector and the 9.3% return for the Zacks Insurance - Property and Casualty industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 7, 2025, HCI Group reported EPS of $5.18 versus consensus estimate of $4.47.
For the current fiscal year, HCI Group is expected to post earnings of $16.32 per share on $891.62 in revenues. This represents a 120.24% change in EPS on a 18.87% change in revenues. For the next fiscal year, the company is expected to earn $15.58 per share on $928.75 in revenues. This represents a year-over-year change of -4.53% and 4.16%, respectively.
Valuation Metrics
Though HCI Group has recently hit a 52-week high, what is next for HCI Group? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). The individual style scores for Value, Growth, Momentum and the combined VGM Score run from A through F. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
HCI Group has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 11.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 11.5X. On a trailing cash flow basis, the stock currently trades at 22.5X versus its peer group's average of 12.4X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this is even more important than the company's VGM Score. Fortunately, HCI Group currently has a Zacks Rank of #2 (Buy) thanks to a solid earnings estimate revision trend.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if HCI Group meets the list of requirements. Thus, it seems as though HCI Group shares could still be poised for more gains ahead.
How Does HCI Stack Up to the Competition?
Shares of HCI have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Mercury General Corporation (MCY). MCY has a Zacks Rank of #1 (Strong Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of D.
Earnings were strong last quarter. Mercury General Corporation beat our consensus estimate by 2,770.00%, and for the current fiscal year, MCY is expected to post earnings of $4.50 per share on revenue of $5.81 billion.
Shares of Mercury General Corporation have gained 7.6% over the past month, and currently trade at a forward P/E of 18.49X and a P/CF of 9.78X.
The Insurance - Property and Casualty industry is in the top 15% of all the industries we have in our universe, so it looks like there are some nice tailwinds for HCI and MCY, even beyond their own solid fundamental situation.
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HCI Group, Inc. (HCI): Free Stock Analysis Report Mercury General Corporation (MCY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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