Trupanion Inc. TRUP is poised to grow on a change in the attitude of pet owners who are focusing on pets’ health and well-being in an underpenetrated pet insurance market, product launches, extended operating boundaries and a solid capital position.

Zacks Rank & Price Performance

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

In a year’s time, the stock has lost 16.7% against the industry’s increase of 26.3%.

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Growth Projections

The Zacks Consensus Estimate for 2022 earnings indicates an upside of 36.3% from the year-ago reported figure on 27.7% higher revenues.

The stock carries a favorable Growth Score of B. This style score analyzes the growth prospects of the company.

Business Tailwinds

This pet insurer operates in a large but underpenetrated market. With a change in the attitude of pet owners, who are increasingly focusing on pets’ health and well-being, TRUP, being a provider of insurance for cats and dogs, is poised for growth in a total addressable market of $34.1 billion.

The average pet now stays with Trupanion for 78 months, up from 76 months in the year-ago period. This is why customers stay for longer periods, ensuring consistent revenue generation. The higher retention rates are indicative of the customers’ fondness for TRUP’s products. TruTopia, a leading indicator of net pet growth, increased 41% in the last reported quarter.

Trupanion stated that, over the long term, companies that can invest in innovation and expand their addressable market are poised to be successful. Thus, TRUP launched low and medium ARPU products, Furkin and pet health insurance direct in Canada. TRUP intends to expand globally by entering Japan and Europe.

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

A solid balance sheet supports investment in new product development and international expansion. Trupanion expects these investments to extend moat and expand the addressable market in the long run. TRUP believes that if it can reach its five-year target, its revenues may grow to more than $1.5 billion. It may reach over 3.5 million pets and deliver growth in the intrinsic value of over 25% per year.

Upbeat Guidance

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

Adjusted operating income is estimated to be $77 million, suggesting a 35% year-over-year increase.

Stocks to Consider

Some better-ranked stocks from the same space include Hallmark Financial Services HALL, Fidelity National Financial FNF and ProAssurance Corporation PRA, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Hallmark Financial’s 2022 earnings stands at 40 cents on revenues of $363.2 million. Hallmark Financial, sporting a Zacks Rank #1, delivered a four-quarter average earnings surprise of 53.62%.

The Zacks Consensus Estimate for 2022 Fidelity National’s earnings has moved up 4.6% in the past 60 days. Fidelity National delivered a four-quarter average earnings surprise of 38.18%.

The Zacks Consensus Estimate for ProAssurance’s 2022 earnings has moved up 5.3% higher in the past 60 days. ProAssurance delivered a four-quarter average earnings surprise of 233.34%.

Shares of HALL, FNF, and PRA have rallied 25.6%, 42% and 20.7%, respectively, in a year.

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ProAssurance Corporation (PRA) : Free Stock Analysis Report

Fidelity National Financial, Inc. (FNF) : Free Stock Analysis Report

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Trupanion, Inc. (TRUP) : Free Stock Analysis Report

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