Here’s why you should stay invested in Trupanion (TRUP) – January 18, 2022

Trupanion Inc.. (TRUP Free Report) is poised to grow thanks to a shift in attitude from pet owners who focus on the health and welfare of pets in an underpenetrated pet insurance market , product launches, extended operating limits and a strong capital position.

Zacks Ranking and Price Performance

Trupanion currently wears a Zacks Rank #3 (Hold).

In one year, the title lost 16.7% against a rise of 26.3% in the industry.

Image source: Zacks Investment Research

Growth projections

Zacks’ consensus estimate for 2022 earnings points to a 36.3% rise from the prior year figure on revenue up 27.7%.

The stock has a favorable growth score of B. This style score analyzes the company’s growth prospects.

Business winds

This pet insurer operates in a large but underpenetrated market. With a changing attitude of pet owners, who are increasingly focusing on the health and welfare of pets, TRUP, as an insurance provider for cats and dogs, is on poised to grow into a total addressable market of $34.1 billion.

The average animal now stays with Trupanion for 78 months, compared to 76 months a year ago. That’s why customers stay longer, which ensures consistent revenue generation. Higher retention rates are a testament to customers’ dedication to TRUP products. TruTopia, a leading indicator of pet net growth, rose 41% in the last quarter.

Trupanion said that in the long run, companies that can invest in innovation and expand their potential market are poised to succeed. Thus, TRUP launched low and medium ARPU products, Furkin and direct pet health insurance in Canada. TRUP intends to expand globally by entering Japan and Europe.

Trupanion remains focused on growing its addressable market by 40% by 2025 and adding 10,000 international hospitals. This will increase its overall market from 25,000 in North America to 35,000 worldwide. In doing so, it also plans to expand its active hospital base.

A strong balance sheet supports investments in new product development and international expansion. Trupanion expects these investments to expand the moat and expand the addressable market in the long run. TRUP estimates that if it achieves its five-year goal, its revenue could reach more than $1.5 billion. It could reach more than 3.5 million pets and generate intrinsic value growth of more than 25% per year.

Optimistic orientation

Trupanion guided total revenue in a range of $696 million to $698 million in 2021, indicating 39% year-over-year growth at the midpoint. Subscription revenue is estimated at $495-496 million, implying 28% year-over-year growth at the midpoint.

Adjusted operating profit is estimated at $77 million, suggesting a 35% year-over-year increase.

Actions to Consider

Some higher ranked stocks from the same space include Hallmark Financial Services (ROOM free report), National Fidelity Financial (FNF free report) and ProAssurance Corporation (ARP Free Report), each sporting a Zacks Rank #1 (Strong Buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Zacks’ consensus estimate for Hallmark Financial’s earnings in 2022 is 40 cents on revenue of $363.2 million. Hallmark Financial, sporting a No. 1 Zacks ranking, posted a surprise four-quarter average profit of 53.62%.

Zacks consensus estimate for Fidelity National’s 2022 revenue rose 4.6% over the past 60 days. Fidelity National posted a four-quarter average earnings surprise of 38.18%.

The Zacks consensus estimate for ProAssurance earnings in 2022 is up 5.3% over the past 60 days. ProAssurance generated a four-quarter average earnings surprise of 233.34%.

Shares of HALL, FNF and PRA rose 25.6%, 42% and 20.7% respectively in one year.