HCI Group (HCI): Assessing Valuation After Impressive Recent Gains

HCI Group (HCI) has delivered a strong stretch of gains, climbing 13% over the past month and nearly 80% year to date. These returns show growing investor confidence in a rapidly evolving insurance sector.

See our latest analysis for HCI Group.

HCI Group has caught investors’ attention with its 1-day share price return of 2.7%, capping an impressive 90-day run of nearly 50%. Short-term momentum is building on top of a long period of gains, reflected in the 72.6% total shareholder return over the past year and a 540% total return over three years.

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Despite the stellar gains, questions remain about HCI Group’s valuation. Is there still untapped potential in the stock? Alternatively, have recent rallies already factored in all the anticipated growth?

Most Popular Narrative: 2% Overvalued

With HCI Group’s share price at $206.37 and the most widely followed narrative putting fair value at $202.50, there is a small disconnect between market enthusiasm and analyst expectations. This presents an opportunity to closely examine the story behind that fair value calculation.

“Expansion beyond Florida and possible Exzeo IPO diversify revenue streams, mitigate risk, and position HCI as a tech-forward insurer with stronger long-term prospects. Heavy reliance on Florida and Citizens depopulation, rising reinsurance costs, and Exzeo uncertainty threaten sustainable growth, margins, and competitive edge amid intensifying market competition.”

Read the complete narrative.

Want to know why analysts believe the tech spin-off and state expansion could unlock billions in value? Their calculation is built on ambitious growth projections, margin improvements, and a future profit multiple that distinguishes HCI from its peers. Discover the full blueprint and see which assumptions are driving the bold narrative fair value.

Result: Fair Value of $202.50 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, HCI’s continued reliance on Florida and uncertainty around the Exzeo IPO could undermine growth if risks materialize sooner than expected.

Find out about the key risks to this HCI Group narrative.

Another View: SWS DCF Model Says Deep Value

While analysts see HCI Group as just slightly overvalued based on future profits, our DCF model paints a dramatically different picture. It estimates HCI’s fair value at $361.57 per share, which is about 43% above the current price. Could the market be missing a much bigger opportunity here?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out HCI Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own HCI Group Narrative

If you want to dig deeper or see the story differently, you can analyze the numbers yourself and share your own perspective in just a few minutes with Do it your way.

A great starting point for your HCI Group research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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