On Mar 25, 2015, Zacks Investment Research downgraded
by a notch to a Zacks Rank #5 (Strong Sell) from a Zacks Rank #4
Why the Downgrade?
Trupanion has been witnessing declining earnings estimates ever
since it announced dismal fourth-quarter 2014 results on Feb 12,
reporting an operating loss of 16 cents per share, slightly lower
than the Zacks Consensus Estimate of a loss of 22 cents. Thus,
Trupanion delivered negative earnings surprises in the trailing
four quarters, with an average of 197.9%.
Net loss of $4.3 million during the quarter widened
substantially from a net loss of $3.2 million in the year-ago
quarter. Top-line growth of 32.9% was more than offset by rise of
32.2% in cost of revenues and 47% in total operating expenses.
Even adjusted EBITDA stood at a loss of $2.9 million against
$1.8 million in the prior-year quarter. Subsequently, operating
cash outflow increased to $10.8 million at 2014-end from $1 million
Going forward, Trupanion continues to expect a negative EBITDA
of $10-$15 million in 2015, despite 25-29% growth projection in
total revenue. The bleak outlook indicates higher expenses to
maintain the retention rate and combat competition in the
Following Trupanion's fourth-quarter earnings, the company
witnessed sluggish estimate revisions, reflecting a lackluster
outlook. The Zacks Consensus Estimate for 2015 moved up a penny to
a loss of 63 cents, the same for 2016 fell by 3 cents to a loss of
32 cents, in the last 60 days.
Moreover, the Most Accurate estimate for Trupanion's 2016 loss
currently stands at 39 cents a share, which translates into an
of -21.9%. This indicates the possibility of an earnings miss next
year as well.
Other Stocks to Consider
Investors interested in the insurance industry could consider
stocks like Employers Holdings, Inc.
, Amerisafe Inc.
and Arch Capital Group Ltd.
. All of these stocks sport aZacks Rank #1 (Strong Buy).
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TRUPANION INC (TRUP): Free Stock Analysis
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