Is There Still an Opportunity in HCI Group After Its 2025 Rally?

• If you are wondering whether HCI Group is still worth buying after its big run up, you are not alone. This stock has quietly moved from niche insurer to serious market talking point.
• The share price now sits around $176.99 after climbing 54.6% year to date and 50.4% over the last 12 months, even though it has pulled back 13.2% over the past month and barely moved in the last week at 0.8%.
• Investors have been reacting to a steady stream of updates around the Florida property insurance market, including ongoing legislative efforts to stabilize the sector and curb abusive litigation, which directly affects HCI’s risk and pricing dynamics. At the same time, market participants have been reassessing catastrophe exposure and reinsurance trends, helping to explain both the strong multi year performance and the recent bout of volatility.
• Despite that rollercoaster, HCI screens as undervalued across all of Simply Wall St’s 6 valuation checks, giving it a value score of 6/6. Next, we will unpack what that means under different valuation approaches. We will then finish by looking at a deeper way to judge whether the current price truly reflects the long term story.

HCI Group delivered 50.4% returns over the last year. See how this stacks up to the rest of the Insurance industry.

Approach 1: HCI Group Excess Returns Analysis

The Excess Returns model looks at how much profit HCI Group can generate above the minimum return investors require on its equity, then projects how long that value creation can continue.

HCI currently has a Book Value of $63.41 per share and is expected to generate stable earnings of $25.01 per share, based on its median return on equity from the past 5 years. With a Cost of Equity of $5.77 per share, that implies an Excess Return of $19.24 per share, which is supported by a strong average Return on Equity of 30.14%. Analysts also see Stable Book Value rising to about $83.00 per share, using weighted future estimates from three analysts.

Putting these inputs together, the Excess Returns model estimates an intrinsic value of about $603.58 per share. Compared with the current share price near $176.99, this indicates HCI Group is roughly 70.7% undervalued. This suggests the market is heavily discounting its ability to keep compounding attractive returns on capital.

Result: UNDERVALUED

Our Excess Returns analysis suggests HCI Group is undervalued by 70.7%. Track this in your watchlist or portfolio, or discover 933 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for HCI Group.

Approach 2: HCI Group Price vs Earnings

For a profitable insurer like HCI Group, the price to earnings (PE) ratio is a practical way to gauge value because it directly links what investors pay today to the company’s current earnings power. In general, faster growing and lower risk businesses justify higher PE ratios, while slower, riskier names tend to trade on lower multiples.

HCI currently trades on a PE of about 11.60x, which sits below the broader Insurance industry average of roughly 13.06x and far below the peer group average near 33.22x. To move beyond simple comparisons, Simply Wall St calculates a proprietary “Fair Ratio”, which estimates the PE HCI should trade on given its earnings growth outlook, profitability, industry, size and specific risks.

This Fair Ratio for HCI comes out at around 13.26x, making it more tailored than blunt industry or peer benchmarks because it factors in both upside potential and risk. Comparing that 13.26x fair PE with the actual 11.60x suggests the market is still applying a discount to HCI’s earnings profile.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your HCI Group Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple framework that lets you turn your view of a company into a joined up story covering its business, financial forecast and fair value. On Simply Wall St’s Community page, millions of investors use Narratives to spell out their assumptions about future revenue, earnings and margins, connect those assumptions to a fair value estimate, and then compare that fair value to the current price to decide whether they would buy, hold or sell. Because Narratives on the platform update dynamically as new information comes in, like earnings results, reinsurance news or regulatory changes, your story about HCI Group is never static or stale. For example, one HCI Narrative might assume strong tech driven margin expansion and arrive at a fair value near $231.67, while a more cautious Narrative focuses on Florida concentration and catastrophe risk, caps growth and margins, and lands closer to $190. Yet both investors can clearly see how their different stories lead to different fair values and therefore different decisions at today’s price.

Do you think there's more to the story for HCI Group? Head over to our Community to see what others are saying!

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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