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Why Trupanion Stock Skyrocketed 44% in November

By Beth McKenna – Dec 3, 2019 at 8:02AM

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Trupanion aims to be the top dog in the underpenetrated North American pet medical insurance business.

What happened

Trupanion (TRUP 5.39%) stock soared 43.8% last month, according to data from S&P Global Market Intelligence. For context, the S&P 500 returned 3.6% in November.

Shares of the provider of medical insurance plans for cats and dogs have gained 31.1% in 2019, as of Dec. 2. That's slightly better than the broader market's 26.5% return over this period. 

Woman wearing a white lab coat and a stethoscope around her neck holding a small light tan-coated dog and a light orange-coated cat.

Image source: Getty Images.

So what 

We can attribute Trupanion stock's powerful performance last month largely to the company's Nov. 5 release of third-quarter results that delighted investors. Shares popped 23.2% the next day and continued their upward climb throughout the month.

In Q3, Trupanion's total revenue jumped 27% year over year to $99.3 million. Growth was driven by a 23% increase in the number of total enrolled pets to 613,694. Subscription revenue rose 23% to $82.6 million, driven by a 15% rise in the number of subscription enrolled pets to 479,427. Net income was $0.8 million, or $0.02 per share, down slightly from $1.2 million, or $0.03 per share, in the year-ago period. Nonetheless, that result was good enough to easily beat the $0.02 per-share loss that Wall Street was expecting.

Now what

Trupanion, which went public in 2014, is worth putting on your watch list. Its total addressable market in the Unites States and Canada is huge -- about 200 million pets, according to its November 2019 investor presentation -- and very underpenetrated relative to other developed markets. About 1% of U.S. pets and 2% of Canadian pets are covered by pet insurance, compared with about 25% in the U.K., according to this presentation.

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Trupanion. The Motley Fool has a disclosure policy.

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