Lemonade (NYSE:LMND) is an insurance company providing renters and homeowners insurance, pet insurance and car insurance. The company was founded in 2015, and is headquartered in New York, NY.
As of 17 Mar 2022, Lemonade's stock is trading at $24.45 and is down by 42% year-to-date (YTD). Over the past 12 months, the stock is down by 77%, whilst the S&P 500 is up by 10%, which means the stock has underperformed the broader market by almost 90% over this period.
But looking beyond this, is Lemonade worth considering as a long-term investment opportunity? Let’s take a closer look and see what some key metrics tell us.
Lemonade's key financial metrics
A good place to start is to look at LMND's earnings per share (EPS), which tells us how profitable the company is on a 'per share' basis. This metric is calculated by taking a company's net income (after dividends on preferred stock) and dividing it by the number of outstanding shares.
Lemonade's EPS is -3.94, based on its most recent financial statements, and year-on-year, the company's EPS fell by 8%, which is quite underwhelming.
We also like to look at a company's price to book value (P/BV), which tells us how much investors are willing to pay for a company's assets. It is calculated by the company's stock price divided by its net assets (or 'book value', meaning the value of all assets which appear 'in its book'). P/BV is used by value investors to identify potential investments, and a P/BV of 1 is usually considered a solid investment.
Based on its most recent financial statements, Lemonade's P/BV is 1.28, which is -21% lower than the industry benchmark of 1.6.
Is Lemonade worth a look?
When we looked at the trends with Lemonade’s stock, we didn’t gain much confidence.
To be more specific, the stock is down by -42% YTD, down by almost 80% over the past year, and is not showing positive EPS growth y/y. That's just not what we like to see.
Whilst the fact that the company lower P/BV compared to competitors might give some investors hope, we don’t think Lemonade is doing enough to deserve a spot in your portfolio right now. However, it may be worth adding to your watchlist to keep an eye on in the future.
Keep in mind that this analysis is general in nature. No single ratio or number will give you all of the information you need, and they must be weighed along with other considerations. Please conduct your own due diligence before deciding to invest.
