EverQuote Stock Forecast: Insurance isn’t cheap – but it also isn’t optional for those who want to protect themselves, their families, and their businesses from financial devastation.
In some cases, insurance is mandated by law. For example, many states require vehicle owners to carry liability insurance, so that other motorists are protected.
In other cases, lenders refuse loans for major purchases like cars and homes unless borrowers agree to keep insurance in force. Those that let it lapse find themselves in violation of their loan agreement.
It’s possible to pass on other types of insurance, such as life insurance, health insurance, renters insurance, and similar, but saving money on monthly premiums has disastrous financial consequences if something goes wrong. The unexpected loss of a loved one can disrupt household finances, thrusting the family members left behind into poverty.
Medical treatment for an accident or illness can result in massive debt – a leading cause of bankruptcy in the United States.
Invest In Insurers Or Insurance Comparison Sites?
Insurance companies are a big business in the US, and many investors include a selection of these stocks in their portfolios. However, investing in the insurers is just one way to tap into the insurance marketplace.
There are also companies that focus their efforts on supporting consumers through the complexities of shopping for insurance.
As premiums go up, the services provided by these companies are gaining popularity. This is particularly true for the businesses that offer their services online. Users get comprehensive cost comparisons on insurance products from the comfort of their own homes.
Smart investors are buying into businesses that quote and compare insurance rates to help consumers save money on must-have financial security. The question is, which of these companies is most likely to return value for shareholders? Right now, EverQuote is the number one pick for many investors and analysts – but can EverQuote produce strong results long-term?
EverQuote Helps Consumers Compare Quotes
EverQuote is an online platform that focuses on the consumer side of insurance. It offers user-friendly tools that allow shoppers to obtain quotes from multiple carries, compare options, and find products that meet their needs in terms of premium cost and level of coverage.
The service partners with insurers and agents to simplify the consumer experience, creating a marketplace that is easy and efficient – and it is free for consumers to use.
The company was founded in 2011 by two entrepreneurs who met at the highly-acclaimed Massachusetts Institute of Technology (MIT). The founders attracted attention from the area’s top FinTech experts who saw promise in the company’s strategy to disrupt the insurance industry. In June 2018, EverQuote went public, and after a slump at the six-month mark, stock prices have grown.
The EverQuote platform currently offers opportunities for shoppers to explore auto, home, renters, life, health, and commercial insurance products.
EverQuote Helps Users Struggling To Find Insurance
In addition to supplying quotes and comparisons, it has a comprehensive set of educational resources. There is detailed information on the various types of insurance, along with explanations of less well-known products, like gap insurance for vehicles, hurricane insurance for homeowners, and the distinction between term and whole life insurance.
The EverQuote site covers frequently asked questions, and it gives users detailed information on solving common insurance-related problems: the nuances of buying car insurance for rideshare drivers, what to do when your dog’s breed is prohibited by your insurance carrier, and how to be certain the proceeds from your life insurance are used as you intended.
The site takes its mission of transparency seriously, so it gives users an in-depth look at how individual carriers are rated by their clients. EverQuote surveys users on their experiences with top insurance companies, and it publishes the results so consumers can make informed decisions before they buy.
How EverQuote Makes Money
Consumers never pay for the EverQuote service. Instead, the company makes money through referral fees collected from carriers.
It is important to note that EverQuote won’t accept payment from carriers in exchange for including that carrier in recommendations made for consumers. It is this promise that gives users confidence that they are getting results tailored to their individual needs.
All of this information is invaluable to individuals who are shopping for insurance, but is there any profit in such a business? EverQuote says yes – and it has proven the point with its most recent financial results, impressing both investors and analysts. So, is EverQuote a buy?
EverQuote Stock Forecast
Investors and analysts have been monitoring EverQuote for some time, and they showed muted enthusiasm when the company announced its IPO. A series of missteps drove stock prices down significantly at the end of 2018, and analysts agreed it was time for investors to let go.
Those that held onto their shares were rewarded handsomely as 2019 progressed. EverQuote redesigned its revenue and marketing strategies, and third quarter results exceeded all expectations. When they were announced in early November, share prices jumped 30 percent – a nice reward for those investors who kept the faith.
Revenue increased by 61 percent year over year, totaling $67.1 million. That figure is particularly impressive considered analysts had only expected around $58.3 million in revenue.
The main driver for the increased revenues was a significant increase in consumer requests for insurance quotes. That figure went up by 81 percent, proving that EverQuote found a proven method to connect with an underserved – and previously untapped – market.
Third quarter 2019 was an important one for EverQuote, because it marked achievement of a critical goal. The company reported its first-ever profit of $200,000 or $0.01 per share.
During the same period last year, EverQuote was operating at a loss. The net loss that quarter was $3.8 million, which translated to a loss of $0.15 per share, and analysts were expecting losses of $0.08 per share for this quarter. The unanticipated profit, though small, marks a turning point for EverQuote.
Is EverQuote a Buy?
Today, EverQuote’s revenues are primarily from its auto insurance segment. That area of the business contributed $57.3 million to the total results, compared to a combined $9.8 million from the home, life, and health divisions.
Many investors and analysts see opportunity for future growth in these figures, and so do business leaders. They increased full-year revenue guidance from the previously forecasted $215 million to $219 million to $242 million to $244 million.
Analysts have changed their guidance on EverQuote, too, and most agree that the company is a buy. For many investors, this is a great time to get into the other side of the insurance market – the side with significant potential for growth.
Learn more about investing in disruptive FinTech companies from the experts at Financhill – where many of the world’s smartest investors go for information.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.