Heritage Stock Moves Above 50-Day SMA: What Should Investors Know?

Shares of Heritage Insurance Holdings, Inc. HRTG closed at $24.84, above its 50-day moving average of $23, indicating a bullish trend. Shares have gained 9.2% in the past three months, outperforming the industry’s increase of 4.4% and the Finance sector’s rise of 5%. The Zacks S&P 500 composite has gained 10% in the said time frame. 

This super-regional U.S. property and casualty insurance holding company is well-positioned to benefit from prudent underwriting execution and rate adequacy initiatives implemented over the past three years.

HRTG Price Movement Vs. 50-Day Moving Average

Image Source: Zacks Investment Research

HRTG vs. Industry, Sector, S&P 500

Its peer HCI Group Inc. HCI, a Florida-based company with operations in property and casualty insurance, information technology services, insurance management, real estate and reinsurance, has gained 36.7% in the past three months, while another peer Universal Insurance Holdings UVE, operating as an integrated insurance holding company in the United States, has gained 18.1% in the same time frame.

What’s Driving HRTG?

Heritage Insurance is sharpening its focus on profitability through rate adequacy, disciplined underwriting, and a cautious stance toward growth in saturated or underperforming markets. In response to weak returns and a difficult reinsurance environment, the company stopped issuing new personal lines policies in Florida and the Northeast in December 2022. However, recent legislative reforms in Florida and greater stability in reinsurance pricing have created a favorable backdrop. Thus, Heritage has resumed writing personal lines business, though under a measured and selective growth approach.

The insurer stays focused on carefully re-entering profitable markets while deploying capital in a disciplined manner to protect margins. Key priorities include maintaining rate adequacy, using advanced data analytics to manage exposures, and leveraging its operating platform to support sustainable expansion. Heritage expects its in-force policy count to stabilize and gradually increase through 2025 and 2026.

To further strengthen its business profile, the company has diversified its portfolio, improving risk distribution, stabilizing claims trends, and reducing reinsurance costs. As of June 30, 2025, about 71% of the total insured value (TIV) was located outside Florida, with 66.2% spread beyond the Southeast. This broader geographic mix reflects meaningful exposure across the Northeast, Mid-Atlantic, West, and Pacific regions.

Heritage’s excess and surplus (E&S) segment remains a central growth driver, supported by expansion into additional states. The company’s reinsurance program continues to provide robust protection against hurricanes and severe weather, while cost-efficient enhancements are expected to lower the ceded premium ratio as gross premiums increase. Heritage recently completed the placement of its 2025–2026 indemnity-based catastrophe excess-of-loss reinsurance program.

At the same time, Heritage is making targeted technology investments, particularly in InsurTech. Initiatives such as Guidewire Cloud adoption, predictive modeling, advanced pricing analytics, its partnership with Slide, and cloud-based claims solutions are strengthening underwriting expertise, improving claims handling, and enhancing competitive positioning.

Estimate Revision Trend

The Zacks Consensus Estimate for HRTG’s 2025 and 2026 earnings witnessed no movement in the past 60 days.
 

The consensus estimate for HCI Group’s 2025 earnings witnessed northward movement in the past 60 days but the same for 2026 witnessed no movement. Estimates for Universal Insurance Holdings were northbound in the same time frame.

Optimistic Growth Estimates for HRTG

The Zacks Consensus Estimate for the company’s 2025 and 2026 EPS implies a 104% and 3.1% year-over-year increase, respectively. HRTG has a Growth Score of A.

HRTG’s Favorable Return on Capital

Return on equity in the trailing 12 months was 33.4% higher than the industry average of 7.7%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders' equity.

Its return on invested capital (ROIC) has been increasing for quite some time. This reflects HRTG’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 24.5%, higher than the industry average of 5.9%.

HRTG Shares Are Expensive

The stock is overvalued compared to its industry. It is currently trading at a price-to-book multiple of 2.01, higher than the industry average of 1.57. But it has a Value Score of A.

HRTG is cheaper than HCI Group but expensive when compared with Universal Insurance Holdings.

Parting Thoughts on HRTG

A growing commercial residential business, expanding personal lines capacity, improving E&S business, better pricing, increasing top line, expanding margins and solid earnings bode well for HRTG’s growth. Its VGM Score of A and strategic focus on accelerating growth raise optimism. The average target price of $31.50 reflects a 26.8% upside potential to yesterday’s closing price. 

However, given its premium valuation and exposure concentration in high-risk prone regions, it is wise to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) insurer. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research