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SelectQuote Shares Plunge 12% Amid Lower EPS Despite Revenue Growth

SelectQuote faces a 12% drop in stock price despite revenue growth. However, a bottom line miss along with government allegations raises concerns. Investors should tread carefully.

Date: 
AI Rating:   5

SelectQuote's Quarterly Performance: Analysis
In the latest report, SelectQuote showcased strong growth in revenue, reaching over $408 million for the fiscal third quarter of 2025, a notable increase from $376 million year-over-year. This growth reflects positively on the company’s operational capabilities in a competitive market.

However, the company reported a net income of only $26 million, or $0.03 per share, which is less than the anticipated $0.04 by analysts. This slight miss on earnings per share (EPS) has been met with disappointment among investors, contributing to the stock's significant decline on a day when the S&P 500 index rose by a considerable 3.3%.

Concerns Over Legal Issues
A critical factor negatively influencing investor sentiment is the ongoing legal troubles SelectQuote faces in relation to allegations of accepting illegal kickback payments. The Department of Justice (DoJ) has brought these allegations against the company, which the management is currently contesting. Such accusations can lead to reputational damage and potential financial penalties, creating uncertainty surrounding the firm's future performance.

While the management has assured stakeholders of their confidence in a positive outcome, the lack of details provided in the earnings release concerning the legal situation raises additional concerns. Investors typically react negatively to uncertain legal landscapes, particularly in cases involving allegations of misconduct.

Outlook and Investment Considerations
Given the robust revenue growth tempered by the earnings miss and looming legal issues, SelectQuote's stock presents a mixed outlook. Investors should consider the implications of both the financial metrics—such as the reported EPS and net income—and external factors, including the impact of ongoing legal matters.

Stocks:  SLQT