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Should You Retain EverQuote (EVER) Stock in Your Portfolio?

EverQuote, Inc. EVER has been gaining momentum on the back of a higher volume of quote requests, strategic acquisitions and improved traffic volumes.

Growth Projections

The Zacks Consensus Estimate for EverQuote’s 2022 earnings indicates year-over-year growth of 0.8%.

Earnings Surprise History

EverQuote has a decent earnings surprise history. Its bottom line beat estimates in three of the last four quarters and missed in one, the average being 6.1%

Style Score

EverQuote has an impressive Growth Score of A. This style score analyzes the growth prospects of a company.

Business Tailwinds

The top-line growth of the multi-line insurer is likely to gain from the solid performance of automotive insurance providers that account for the lion’s share of the revenues. The Zacks Consensus Estimate for EverQuote’s 2022 revenues is pegged at $429.43 million, indicating a year-over-year increase of nearly 4%.

Banking on solid traffic operations that attract more consumers to the marketplace, quote request growth is likely to improve. EVER expects continued growth in quote requests.

Lower advertising costs coupled with improvements in traffic volumes and monetization aided the company in delivering improved variable marketing margin (VMM), one of the primary metrics for managing a business. EverQuote expects VMM to gain from strong revenue growth within the health direct-to-consumer agency during the annual health open enrollment period. This, in turn, is expected to drive an improvement in VMM operating point for the overall business.

EverQuote witnessed impressive inorganic growth. The insurer has acquired PolicyFuel, LLC and its affiliated entities in August 2021 to support its property and casualty (P&C) carrier partners. In this recent deal, PSaaS offerings of PolicyFuel for P&C markets will further extend EverQuote’s existing Direct-To-Consumer Agency (DTCA) strategy in Health and Life insurance verticals. PolicyFuel's policy sales-as-a-service business model is expected to provide the insurer with revenue diversity during a challenging period for the auto insurance marketplace.

The multi-line insurer’s capital and liquidity position remain strong, with over $41.8 million of cash and cash equivalents. The insurer also boasts a debt-free balance sheet. EVER has access to a $25 million revolving credit facility. In the first nine months of 2021, operating cash flow was a positive $14 million. The robust capital position supports EverQuote in its growth initiatives.

Upbeat Guidance

EverQuote guided fourth-quarter 2021 revenues to be in the range of $93.5 million and $98.5 million, indicating a year-over-year increase of 22% at the mid-point. Variable marketing margin is expected between $30.5 million and $33.5 million.

EverQuote also guided its 2021 revenue expectation to a range of $410 million to $415 million, indicating an increase of 19% at the midpoint. The variable margin is estimated to be between $127 million and $130 million, implying a year-over-year increase of 18% at the mid-point. Adjusted EBITDA is now expected to be in the range of $12.5 million to $15.5MILLION.

Zacks Rank & Price Performance

EverQuote currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 58% against the industry’s growth of 3.3%. We believe its operational efficiencies and solid capital position will help the shares bounce back.

Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked stocks from the multi-line insurance sector are Enact Holdings ACT, MGIC Investment MTG and Radian Group RDN, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enact Holdings’ earnings surpassed estimates in each of the last four quarters, the average beat being 5%. In the past year, ACT has gained 8.7%.

The Zacks Consensus Estimate for Enact Holdings’ 2022 earnings has moved 9.6% north in the past 60 days. Enact Holdings’ expected long-term earnings growth rate is pegged at 11.1%.

MGIC Investment’s earnings surpassed estimates in each of the last four quarters, the average beat being 3.76%. In the past year, MTG has gained 21%.

The Zacks Consensus Estimate for MGIC Investment’s 2022 earnings has moved 6.7% north in the past 60 days. MTG’s expected long-term earnings growth rate is pegged at 5%.

Radian’s earnings surpassed estimates in three of the last four quarters and missed in one, the average beat being 1.64%. In the past year, RDN has gained 7.1%.

The Zacks Consensus Estimate for Radian’s 2022 earnings has moved 5.5% north in the past 60 days. Radian’s expected long-term earnings growth rate is pegged at 5%. The Zacks Consensus Estimate for RDN’s 2022 earnings implies a year-over-year increase of 13.9%.


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MGIC Investment Corporation (MTG): Free Stock Analysis Report
 
Radian Group Inc. (RDN): Free Stock Analysis Report
 
EverQuote, Inc. (EVER): Free Stock Analysis Report
 
Enact Holdings, Inc. (ACT): Free Stock Analysis Report
 
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