Home Stock list Why Trupanion shares soared 28% in June

Why Trupanion shares soared 28% in June

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What happened

Trupanion (NASDAQ: TRUP) The stock rose 27.7% last month, according to data from S&P Global Market Intelligence. This pop was probably due to the fact that some investors saw the stock as an attractive buy after the sell that started earlier in the year.

For the context, the S&P 500 reported 2.3% in June.

Despite a pullback since February, shares of the cat and dog medical insurance plan provider (which held its initial public offering in 2014) have gained 169% over the one-year period until 2 July. The larger market returned 41.2% during this period. .

Image source: Getty Images.

So what

Trupanion issued several press releases last month, but individually none of them seemed to be a noticeable catalyst for the stock’s 28% rise in June, as that gain was gradual. There was also no stock upgrade on Wall Street last month.

We can probably attribute the stock’s June pop to some investors who picked up stocks believing that the stock’s recent sell-off was overstated. From their all-time high, set in early February, stocks have plunged around 42% until they stabilized in early April.

Trupanion has experienced rapid revenue growth. First-quarter revenue jumped 39% year-over-year to $ 154.7 million, thanks to a 27% increase in subscription business to $ 113.3 million .

The business is not profitable, however, although this is not uncommon for companies that have not been public for a long time and invest heavily in growth initiatives. In the first quarter, it recorded a net loss of $ 12.4 million, or $ 0.31 per share, down from a net loss of $ 1.1 million, or $ 0.03 per share, during the period of the previous year.

Now what

Although Trupanion has yet to announce a date for the release of its second quarter results, it is expected to do so in early August.

For the second quarter, Wall Street expects the company’s revenue to grow 40% year-over-year to $ 164.9 million. Ultimately, analysts are forecasting a loss of $ 0.12 per share, compared to earnings per share of $ 0.04 during the period last year.

Trupanion Stock is worth putting on your watch list. The company is a leader in a market with strong growth potential. There are approximately 180 million pet dogs and cats in North America, according to the company’s June 2021 investor presentation. Only about 1% of US pets and 2% of Canadian pets are covered by pet insurance, compared to a much higher percentage in other similar foreign markets, such as the UK, where this percentage is about 25%, by Trupanion.

Additionally, the total number of pets in North America has increased at a faster rate than usual recently, due to the COVID-19 pandemic.

To learn more about Trupanion, you can read why my colleague Sean Williams thinks it’s one of the five growth stocks that have the potential to bring in at least 500% this decade.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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