We expect auto insurer
) to beat expectations when it reports second-quarter 2013
results on Jul 11.
Why a Likely Positive Surprise?
Our proven model shows that Progressive is likely to beat
earnings because it has the right combination of two key
Positive Zacks ESP
: Expected Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
), which represents the difference between the Most Accurate
Estimate and the Zacks Consensus Estimate, is at +2.50%. This is
very meaningful and a leading indicator of a likely positive
earnings surprise for shares.
Zacks Rank #2 (Buy):
Progressive carries a Zacks Rank #2 (Buy). Note that stocks with
Zacks Ranks of #1, #2 and #3 have a significantly higher chance
of beating earnings. The sell rated stocks (#4 and #5) should
never be considered going into an earnings announcement.
The combination of Progressive's Zacks Rank #2 (Buy) and +2.50%
ESP makes us very confident in looking for a positive earnings
beat on Jul 11.
What is Driving the Better Than Expected
In the first two months of the quarter - April and May
- the company generated a total of 42 cents in
earnings, with premiums increasing year over year for both
The company was successful in reducing costs as well. Although
total expense in April grew 5% year over year, the same declined
14% in May.
Progressive's operating earnings and premiums' growth as well as
debt-to-total capital ratio in the last two months of this year
reflect an overall constant improvement. Current policies in
force also remained healthy. Progressive remains focused on
maintaining a healthy policy life expectancy, which is a
significant measure to retain customers.
Other Stocks to Consider
Progressive is not the only firm looking up this earnings season.
We also see likely earnings beats coming from these 3 industry
W.R. Berkley Corporation
): Earnings ESP of +1.47% and a Zacks Rank #1 (Strong Buy).
): Earnings ESP of +2.52% and a Zacks Rank #1 (Strong Buy).
Maiden Holdings, Ltd
): Earnings ESP of +3.70% and a Zacks Rank #2 (Buy).
CIGNA CORP (CI): Free Stock Analysis Report
MAIDEN HOLDINGS (MHLD): Free Stock Analysis
PROGRESSIVE COR (PGR): Free Stock Analysis
BERKLEY (WR) CP (WRB): Free Stock Analysis
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