Is Palomar Holdings, Inc. overvalued or undervalued?

As of 4 June 2025, the valuation grade for Palomar Holdings, Inc. has moved from very expensive to expensive, indicating a slight improvement in perceived value. The company is currently considered overvalued, with a P/E ratio of 33 compared to the industry average of approximately 12.45, as seen in peer companies like Mercury General Corp. and Kemper Corp. Additionally, Palomar's EV to EBITDA stands at an exceptionally high 2266.39, further highlighting its overvaluation relative to peers.
In comparison, Kemper Corp. and Mercury General Corp. exhibit much lower P/E ratios of 10.70 and 12.45, respectively, suggesting that investors are paying significantly more for Palomar's earnings than for those of its competitors. The PEG ratio of 0.81 indicates some growth potential, but the high valuation metrics overshadow this. Notably, while Palomar has outperformed the S&P 500 over the past year with a return of 104.79% compared to 10.26%, the current valuation suggests that the stock may not sustain this growth relative to its price.