Why Universal Insurance Holdings, Inc. Shares Tanked Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Universal Insurance Holdings  (NYSE: UVE  ) are trading over 15% lower today after the insurer reported its first-quarter earnings last night.

So what: Universal Insurance reported earnings of $0.38 per share, a 31% year-over-year improvement, thanks to a 48% year-over-year increase in total policies, mainly outside of Florida. The company's net revenue was $74.3 million, representing growth of 10% year over year. The only estimate to be found regarding Universal Insurance's bottom line, however, had called for $0.51 in EPS. 

Now what: Universal Insurance's shares had more than doubled over the past year prior to this report, and investors who bought shares as late as October are still holding onto a near double. This isn't unreasonable, as Universal's EPS has surged over the past two years, and its P/E is a rock-bottom 8.2 after today's drop. There's no fundamental reason why you should be afraid of this stock today -- this could be the buying opportunity you've been waiting for.

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Alex Planes

Alex Planes specializes in the deep analysis of tech, energy, and retail companies, with a particular focus on the ways new or proposed technologies can (and will) shape the future. He is also a dedicated student of financial and business history, often drawing on major events from the past to help readers better understand what's happening today and what might happen tomorrow.

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