Lemonade (LMND) to Report Q4 Earnings: What's in the Cards?

Lemonade, Inc. LMND is slated to report fourth-quarter 2020 results on Mar 1, after market close. The company delivered an earnings surprise of 17.39% in the last reported quarter.

Factors to Consider

Premiums are likely to have improved, given the company’s focus  on shifting product mix toward higher value homeowner policies, introduction of Pet insurance and  growth in the overall average policy value. The Zacks Consensus Estimate for premium per customer is pegged at $207.

Lemonade projects gross earned premium between $46 and $48 million for the fourth quarter of 2020, given likely improvement in in-force premium.

In-force premium in the to be reported quarter is likely to have been aided by increase in customer base as well as improvement in premium per customer. The company estimates in force premium between $200 and $205 million as on Dec 31, 2020. The Zacks Consensus Estimate for the metric is pegged at $206 million.

Lemonade projects revenues between $18 and $19 million. The Zacks Consensus Estimate for the metric is pegged at $19.3 million.

Given its exposure to catastrophes, the company is likely to have borne the brunt of catastrophe losses, stemming from hurricanes Delta and Zeta, and the Tropical Storm Eta apart from other windstorms.

Expenses are expected to have increased attributable to rise in other insurance expense, technology development, and general and administrative expense. Lemonade projects adjusted EBITDA loss in the range of $32 to $34 million for the to-be-reported quarter.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Lemonade this time around. This is because the stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This is not the case as you can see below

Earnings ESP: Lemonade has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of 65 cents per share. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Lemonade, Inc. Price and EPS Surprise

Lemonade, Inc. Price and EPS Surprise

Lemonade, Inc. price-eps-surprise | Lemonade, Inc. Quote

Zacks Rank: Lemonade currently carries a Zacks Rank of 3.

Stocks to Consider   

Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

Aercap Holdings AER has an Earnings ESP of +39.11% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Open Lending Corporation LPRO has an Earnings ESP of +3.17% and a Zacks Rank #3.

Barings BDC BBDC has an Earnings ESP of +7.04% and a Zacks Rank of 3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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