Trupanion (TRUP) AI Stock Analysis

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Trupanion

(NASDAQ:TRUP)

Rating:67Neutral

Price Target:

$49.00

▼(-0.77%Downside)

Trupanion's stock score reflects strong revenue growth and positive cash flow improvements, which are offset by ongoing profitability challenges and valuation concerns. The recent earnings call provides a positive outlook with robust guidance and improved retention, enhancing the overall score. The approval of a significant dividend adds to the positive sentiment, despite some market share challenges and adverse reserve developments.

Positive Factors

Customer Retention

Despite the price increases, customer retention remains high at roughly 98%.

Earnings

The company reported Q3 results that were ahead on revenue and adj. operating income.

Negative Factors

Financial Performance

Management expressed confidence that after months of significant margin pressure, Trupanion is approaching a sustainable margin position to support increased pet acquisition spend.

Trupanion (TRUP) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$2.00B

Dividend YieldN/A

Average Volume (3M)569.30K

Price to Earnings (P/E)―

Beta (1Y)1.64

Revenue Growth14.08%

EPS Growth84.28%

CountryUS

Employees1,130

SectorFinancial

Sector Strength86

IndustryInsurance - Specialty

Share Statistics

EPS (TTM)-0.03

Shares Outstanding42,783,676

10 Day Avg. Volume459,309

30 Day Avg. Volume569,300

Financial Highlights & Ratios

PEG Ratio-7.69

Price to Book (P/B)5.68

Price to Sales (P/S)0.00

P/FCF Ratio35.58

Enterprise Value/Market Cap0.93

Enterprise Value/Revenue0.37

Enterprise Value/Gross Profit9.59

Enterprise Value/Ebitda25.10

Forecast

1Y Price Target

$51.00

Price Target Upside3.28% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

Trupanion Business Overview & Revenue Model

Company DescriptionTrupanion, Inc., together with its subsidiaries, provides medical insurance for cats and dogs on a monthly subscription basis in the United States, Canada, Puerto Rico, and Australia. The company operates in two segments, Subscription Business and Other Business. It serves pet owners and veterinarians. The company was formerly known as Vetinsurance International, Inc. changed its name to Trupanion, Inc. in 2013. The company was founded in 2000 and is headquartered in Seattle, Washington.

How the Company Makes MoneyTrupanion makes money primarily through the sale of pet insurance policies. The company generates revenue by collecting monthly premiums from pet owners who purchase their insurance plans. These premiums vary based on factors such as the pet’s breed, age, and location, which help determine the risk and cost associated with insuring each pet. Trupanion also establishes partnerships with veterinary clinics to facilitate direct payment of claims, providing a seamless experience for both pet owners and veterinarians and helping drive customer acquisition and retention. Additionally, Trupanion may earn revenue through ancillary services and products that complement its core insurance offerings.

Trupanion Key Performance Indicators (KPIs)

Any

Pets Enrolled

Pets Enrolled
Tracks the number of pets covered by Trupanion, reflecting customer base size and potential for revenue growth through increased enrollments.

Chart InsightsTrupanion's total pets enrolled have been declining since late 2023, contrasting with steady growth in subscription enrollments. Despite this, the earnings call highlights strong financial performance, with a 16% increase in subscription revenue, driven by higher average revenue per pet. Operational efficiencies and improved retention rates are contributing to profitability. However, challenges remain in first-year customer retention and market share. The company is optimistic, raising its 2025 revenue guidance, indicating confidence in overcoming these hurdles and sustaining growth.

Data provided by:

Main Street Data

Trupanion Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q1-2025)

% Change Since: 35.51%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Positive

Trupanion's first quarter of 2025 showed strong financial performance and growth in key areas such as revenue, adjusted operating income, and operational efficiencies. However, the company faced challenges with adverse reserve development and retention of first-year customers. Despite market share losses in the previous year, the company is optimistic about future growth and improvements. Overall, the positive aspects of increased profitability, improved retention, and operational efficiencies outweigh the challenges faced.

Q1-2025 Updates

Positive Updates

Strong Start to Fiscal Year 2025

Trupanion reported overachievement on both total revenue and total adjusted operating income in Q1 2025. Subscription adjusted operating income increased 53% year-over-year to over $30 million.

Core Subscription Business Growth

Revenue was $233 million, up 16% year-over-year, driven primarily by increases in average revenue per pet and a modest lift from growth in enrolled pets.

Improved Operational Efficiencies

The company achieved a substantial year-over-year increase of 350 basis points in value proposition, ending the quarter at 71.8% due to operational efficiencies and transition to the Vision technology platform.

Increase in Pet Acquisition Investment

Investment in pet acquisition increased 18% year-over-year, maintaining a 31% internal rate of return. The average profit per Trupanion Pet was up 46% year-over-year.

Improved Retention Rates

Monthly average retention improved quarter-on-quarter for the first time in 12 quarters to 98.28%, driven by improvements within the core Trupanion product.

Positive Financial Outlook for 2025

Full-year guidance was increased, with total revenue expected to be in the range of $1.39 billion to $1.425 billion and total adjusted operating income expected to grow by 15% year-over-year at the midpoint.

Negative Updates

Adverse Reserve Development

Q1 experienced adverse development from prior periods totaling $1.7 million or approximately 70 basis points of revenue.

Challenges in First-Year Retention

Retention for first-year customers declined significantly, attributed to a lack of focus on this segment as efforts were directed towards managing existing members with high rate increases.

Market Share Challenges

Trupanion experienced market share losses in 2024, attributed to the pullback on pet acquisition costs to focus on margin expansion.

Company Guidance

During Trupanion's first quarter 2025 earnings call, the company provided robust guidance, highlighting several key metrics. The subscription adjusted operating income surged by 53% year-over-year to over $30 million, driven by an improved loss ratio and operational efficiencies. Subscription revenue reached $233 million, marking a 16% increase compared to the previous year, largely due to a higher average revenue per pet and growth in enrolled pets. The value proposition also rose by 350 basis points, ending the quarter at 71.8%. Trupanion's focus on retention yielded results, as the monthly average retention improved to 98.28%, the first quarterly uptick in three years. The pet acquisition investment increased by 18% year-over-year, with an internal rate of return holding at 31%. Additionally, the company raised its full-year 2025 revenue guidance to between $1.39 billion and $1.425 billion, with subscription revenue expected to grow by approximately 14% year-over-year at the midpoint. For the second quarter, Trupanion forecasted total revenue to range from $344 million to $350 million, with subscription revenue anticipated to grow by 15% year-over-year at the midpoint.

Trupanion Financial Statement Overview

Summary

Trupanion shows strong revenue growth and improving cash flows. However, profitability is a concern with ongoing net losses and negative net profit margins. The balance sheet is stable but not particularly strong in generating returns for shareholders.

Income Statement

Neutral

Trupanion has demonstrated consistent revenue growth with a TTM revenue increase of approximately 2.79% compared to the previous annual period. However, the company continues to face profitability challenges, with negative net income and negative EBIT margins. The gross profit margin stands at 14.65%, indicating some efficiency in revenue generation, but the negative net profit margin of -0.32% highlights ongoing losses.

Balance Sheet

Neutral

The balance sheet reflects a reasonable debt-to-equity ratio of 0.39, suggesting moderate leverage. The equity ratio of 39.86% indicates a balanced capital structure. However, the return on equity remains negative at -1.28%, which is a concern for shareholder returns. The company's financial position is stable but not overly strong, given the negative profitability metrics.

Cash Flow

Positive

Trupanion's cash flow statement shows positive growth in operating cash flow, with a TTM operating cash flow to net income ratio of 14.50. The free cash flow has also improved significantly, showing a growth rate of 37.99% from the previous period. The positive free cash flow to net income ratio of 12.48 indicates better cash management despite net losses.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.32B	1.29B	1.11B	905.18M	698.99M	502.03M
	Gross Profit
193.67M	178.80M	131.02M	122.19M	104.35M	81.90M
	EBIT
-4.54M	-9.51M	-40.66M	-42.75M	-35.02M	-4.35M
	EBITDA
26.39M	21.33M	-20.48M	-29.01M	-23.25M	2.73M
	Net Income Common Stockholders
-4.26M	-9.63M	-44.69M	-44.67M	-35.53M	-5.84M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
321.82M	307.38M	277.17M	222.41M	213.41M	229.74M
	Total Assets
837.16M	806.85M	782.95M	671.63M	562.58M	498.25M
	Total Debt
128.88M	128.89M	128.93M	69.46M	0.00	0.00
	Net Debt
-37.43M	-31.41M	-18.57M	3.85M	-87.40M	-139.88M
	Total Liabilities
503.49M	483.58M	479.23M	366.33M	230.38M	158.31M
	Stockholders Equity
333.67M	323.27M	303.72M	305.30M	332.20M	339.94M
Cash Flow		Free Cash Flow
53.24M	38.57M	358.00K	-25.09M	-4.90M	14.09M
	Operating Cash Flow
61.82M	48.29M	18.64M	-8.00M	7.46M	21.54M
	Investing Cash Flow
-19.69M	-13.46M	7.64M	-67.52M	-51.91M	-76.75M
	Financing Cash Flow
-4.13M	-3.96M	59.13M	60.74M	-1.13M	170.85M

Trupanion Technical Analysis

Technical Analysis Sentiment

Positive

Last Price49.38

Price Trends

50DMA

40.36

Positive

100DMA

40.93

Positive

200DMA

44.96

Positive

Market Momentum

MACD

2.17

Negative

RSI

69.48

Neutral

STOCH

77.94

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TRUP, the sentiment is Positive. The current price of 49.38 is above the 20-day moving average (MA) of 45.88, above the 50-day MA of 40.36, and above the 200-day MA of 44.96, indicating a bullish trend. The MACD of 2.17 indicates Negative momentum. The RSI at 69.48 is Neutral, neither overbought nor oversold. The STOCH value of 77.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TRUP.

Trupanion Risk Analysis

Trupanion disclosed 57 risk factors in its most recent earnings report. Trupanion reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

We are subject to numerous laws and regulations in multiple jurisdictions, and ongoing compliance may be challenging for us. Q4, 2024

In Canada, we are planning a significant ramp of underwriting activity by our subsidiary GPIC during 2025, while simultaneously reducing our business written through Accelerant. This transition may be delayed or may be not be successful. Q4, 2024

We may face unexpected costs as a result of owning our own headquarters office building. Q4, 2024

Trupanion Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EIG	72 Outperform	$1.17B	11.79	9.84%	2.51%	-0.88%	-12.63%
AMSF	72 Outperform	$907.37M	19.20	16.89%	3.16%	-2.51%	-22.68%
TRUP	67 Neutral	$2.00B	―	-1.34%	―	14.08%	84.28%
TIPT	65 Neutral	$856.43M	18.57	11.12%	1.05%	15.76%	105.98%
Sector *	64 Neutral	$12.79B	9.71	7.54%	16971.00%	12.07%	-7.53%
HIPO	55 Neutral	$619.62M	―	-15.58%	―	77.44%	85.53%
AMBC	44 Neutral	$365.38M	72.67	-2.23%	―	10.50%	-92.02%

* Financial Sector Average

Performance Comparison

TRUP

Trupanion

49.38

20.62

71.70%

AMSF

Amerisafe

47.14

7.13

17.82%

EIG

Employers Holdings

48.50

8.37

20.86%

AMBC

Ambac Financial

7.79

-6.02

-43.59%

TIPT

Tiptree Financial

22.77

5.35

30.71%

HIPO

Hippo Holdings

24.35

6.51

36.49%

Trupanion Corporate Events

DividendsBusiness Operations and Strategy

Trupanion Receives Approval for $26M Dividend

Positive

May 15, 2025

On May 15, 2025, the New York Department of Financial Services approved a $26 million extraordinary dividend to be paid to Trupanion, Inc. by its wholly-owned subsidiary, American Pet Insurance Company. This approval could enhance Trupanion’s financial flexibility and potentially improve its market positioning, benefiting stakeholders by possibly increasing shareholder value.

The most recent analyst rating on (TRUP) stock is a Hold with a $30.00 price target. To see the full list of analyst forecasts on Trupanion stock, see the TRUP Stock Forecast page.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.