SelectQuote (SLQT, Financial) shares experienced a sharp decline, falling 11.99%. This drop followed the release of the company's latest quarterly earnings report, which failed to meet earnings expectations despite exceeding revenue forecasts.
During the fiscal third quarter of 2025, SelectQuote (SLQT, Financial) reported revenue of over $408 million, marking an increase from the prior year's $376 million for the same period. The company achieved a GAAP net income of over $26 million, or $0.03 per share, which contrasts significantly with the under-$8.6 million profit recorded in fiscal 2024. However, the earnings per share fell short of the anticipated $0.04, causing concern among investors.
Despite this positive revenue performance, the earnings miss and external issues have likely contributed to the stock's notable decline. Notably, SelectQuote did not address allegations from the Department of Justice regarding illegal "kickback" payments in its earnings release, further unnerving shareholders.
From a valuation perspective, SelectQuote (SLQT, Financial) presents a complex picture. The stock is currently trading at $2.35 per share with a market capitalization of approximately $404.54 million. Its GF Value is estimated to be $2.67, which suggests that the stock could be considered modestly undervalued. However, caution is advised due to an Altman Z-Score of 1.52, reflecting financial distress, and a gross margin that is on a long-term decline, averaging a 10.2% decrease per year.
Additionally, SelectQuote's Beneish M-Score of -2.48 indicates that the company is unlikely to be a manipulator, and insider buying activity with a total of 4,000 shares in recent months suggests some internal confidence. However, financial leverage remains high with a debt-to-equity ratio of 2.27, highlighting significant financial obligations.
Given the current financial metrics and broader circumstances surrounding SelectQuote (SLQT, Financial), potential investors should carefully weigh these factors when considering an investment in the company's shares.
