HCI Group Inc. Common Stock (HCI)

FairStock Score: 95/100 — HIGH CONVICTION

Key Financials

Strengths

• Generates $403 million in annual free cash flow (20.1% yield on market cap)
• High return on equity of 40.5% demonstrating efficient capital deployment
• Conservative balance sheet with debt-to-equity of just 0.06, providing financial flexibility
• Healthy net profit margin of 10.8% showing consistent profitability
• Revenue growth of 52.6% demonstrates strong top-line momentum

Concerns

• Altman Z-Score of 1.3 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

HCI Group Inc. Common Stock is a small-cap financial services company valued at $2.0 billion. The business generates $901 million in annual revenue with a 10.8% net margin and $403 million in free cash flow. From a quality standpoint, HCI shows distressed Altman Z-Score of 1.3 warrants caution and extraordinary 40% return on equity. On valuation, the stock is deeply undervalued on a P/E basis at 6.8x, with a modest 24% margin of safety vs Graham Number. Growth dynamics show revenue growing at 52.6% and profit growth of 3679.2%. The 1.0% dividend yield adds an income component for patient holders. Our composite FairStock Score of 95/100 reflects strong fundamentals overall. This combination of reasonable valuation, solid returns, and conservative leverage makes it worth a closer look for value-oriented portfolios.

Bull Case

HCI's 53% revenue growth trajectory could accelerate as it captures additional market share in the financial services sector. With $403 million in annual free cash flow (20.1% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the financial services space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer