Can Progressive (PGR) Beat Estimates This Earnings Season?

The Progressive Corporation PGR is slated to report first-quarter 2019 results on Apr 16 before market open. The company delivered positive surprise in three of the last four quarters.

Factors to Consider

Competitive rates and solid policies in force across all its business lines should continue to drive premiums for Progressive in the to-be reported quarter. Policies in force are benefiting from investments in product design that focuses on segmentation and risk selection.

Improved interest rate is expected to aid net investment income.

These coupled with higher service revenues and fees as well as other revenues are expected to fuel top-line improvement in the to-be reported quarter. The Zacks Consensus Estimate for revenues is pegged at $8.9 billion, up 18.8% year over year.

Its Personal auto business is likely to benefit from focus on marketing and competitive product offerings as well as strong market presence. Progressive is one of the leading auto insurers in the United States, boasting one of the nation’s largest auto insurance groups. It is also the largest seller of motorcycle policies, the market leader in commercial auto insurance and one of the top 15 homeowners carriers based on premiums written.

The Property business is expected to retain its momentum with cat events of significant magnitude inducing more policy writings.

Strong performing Vehicle and Property businesses are expected to benefit Personal and Commercial business lines.

Expenses are likely to rise on higher loss and loss-adjustment expenses, policy acquisition costs plus other underwriting expenses.

The Zacks Consensus Estimate is pegged at $1.38 per share, indicating 13.1% year-over-year growth.

What Our Quantitative Model Says

Our proven model shows that Progressive is likely to beat estimates in the to-be reported quarter. This is because it has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Progressive has an Earnings ESP of +0.09%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

The Progressive Corporation Price and EPS Surprise

The Progressive Corporation Price and EPS Surprise | The Progressive Corporation Quote

Zacks Rank: Progressive carries a Zacks Rank of 2, which increases the predictive power of ESP.

We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Some other insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

RLI Corp. RLI has an Earnings ESP of +2.56% and a Zacks Rank #2. The company is slated to announce first-quarter earnings on Apr 17. You can see the complete list of today’s Zacks #1 Rank stocks here.

W.R. Berkley Corporation WRB is set to report first-quarter earnings on Apr 23. The stock has an Earnings ESP of +1.97% and a Zacks Rank of 3.

Radian Group Inc. RDN has an Earnings ESP of +0.74% and a Zacks Rank of 3. The company is anticipated to release fourth-quarter earnings on Apr 25.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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