ERIE
Erie Indemnity Company$242.70
Sell
Target $210.36
Report: Mar 13, 2026Financial Services • Insurance - Brokers • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$242.70-13.3%
Rec: SellConviction: High
Entry Target
N/A
N/A
Fair Value
$210.36
(13% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$434.00
52 Week Low$233.82
Avg. 3 Month Volume222K
Efficiency
LTM Gross Margin17.6%
LTM EBITDA Margin17.5%
LTM EBIT Margin17.5%
LTM Operating Margin17.6%
LTM ROA17.5%
LTM ROE25.3%
LTM ROIC36.8%
LTM ROCE31.3%
Capital Structure
Market Cap (MM)$11.6B
Enterprise Value (MM)$11.3B
Shares Outstanding46.19M
Total Debt (MM)$0.00M
Cash & Equivalents (MM)$345.87M
LTM Net Debt (MM)$-345.87M
LTM Net Debt/EBITDA-0.5x
Growth
TTM Rev. Growth7.2%
Last 3-Yr Rev. CAGR12.7%
Last 3-Yr EBITDA CAGR23.4%
Last 3-Yr EPS CAGR23.3%
Valuation
Street Target PriceN/A
LTM EV/Revenue2.8x
LTM EV/Gross Profit15.7x
LTM EV/EBIT15.8x
LTM EV/EBITDA15.8x
LTM P/E20.8x
LTM EV/FCF19.7x
LTM P/FCF20.3x
LTM P/TB3.5x
LTM P/B5.1x
Dividend Yield2.2%
Payout Ratio46.3%
Executive SummarySituation: Current price is $242.7 versus fair value $210.36 (-13.3% expected return), and valuation confidence is stable. Debate: Bull case depends on Management Fee Reduction: A structural shift in the attorney-in-fact agreement that lowers the fee cap from 25% to 24%. Bear case centers on Moat Erosion via Fee Cap Reduction: The mechanism by which fiduciary pressure or regulatory scrutiny forces a reduction in the 25% management fee. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
ERIE is a Dividend Aristocrat with 25+ years of consecutive increases and a fortress balance sheet with zero debt. Pricing power remains intact via the Rate-Lock feature, supporting high policyholder retention of approximately 90%.
Bear Case
Management fee reduction risk could cut earnings by 20% if the cap is lowered to 24%. Negative incremental ROIC of -24.5% suggests capital is being misallocated into inefficient technology projects.
Key Catalysts
Mid-Term (6-18 months)Impact: Critical
Management Fee Reduction: A structural shift in the attorney-in-fact agreement that lowers the fee cap from 25% to 24%.
Mid-Term (6-18 months)Impact: High
CEO Succession Announcement: The naming of a successor to Timothy NeCastro ahead of his 2026 retirement.
Long-Term (18+ months)Impact: Moderate
ERIE is relevant for analysis now due to the convergence of a major leadership transition, rising short interest (8.9% of float), and a tech...
Primary Risks
Concern: High
Moat Erosion via Fee Cap Reduction: The mechanism by which fiduciary pressure or regulatory scrutiny forces a reduction in the 25% managemen...
Concern: Medium
Catastrophe Loss Volatility: Persistent weather events that impair the surplus of the Erie Insurance Exchange and limit the company's abilit...
Concern: Medium
The stewardship verdict is 'Adequate' but constrained by a lack of transparency. The governance outcome tree is currently bifurcated: 1. Sta...
Recent Activity
2025-10-31SEC Filing (8-K)
-5.49%Erie Indemnity reports Q3 2025 financial results with net income of $182.9 million.
2025-04-25SEC Filing (8-K)
-11.47%Erie Indemnity reports Q1 2025 financial results with net income of $138.4 million.
2025-02-28SEC Filing (8-K)
+5.70%Erie Indemnity reports full year and Q4 2024 financial results.
2024-12-18SEC Filing (8-K)
-5.02%Erie Indemnity appoints new executive vice presidents for Claims and Experience & Customer Service.
2024-11-01SEC Filing (8-K)
-7.50%Erie Indemnity reports Q3 2024 financial results with net income of $159.8 million.
Valuation Table
9.7/10Decision Grade
Scenario Range
$150
Bear
$216
Base
$262
Bull
$243