Progressive (PGR) to Report Q3 Earnings: Is a Beat in Store?

The Progressive Corporation PGR is slated to report third-quarter 2019 results on Oct 16, before market open. The company delivered a positive surprise in the last two reported quarters of 2019.

Factors to Consider

Progressive’s third-quarter premiums are likely to have benefited from solid policies in force, higher retention, competitive rates and compelling product portfolio.

Premiums might have benefited from increase in business volumes.

Policies in force have been benefiting from focus on segmentation and risk selection. The Zacks Consensus Estimate for personal lines policies in force is pegged at 19,159 million, indicating an increase of 9.4% from the year-ago reported quarter.

Improved premiums, rise in investment income, increase in service revenues and fees as well as other revenues are likely to have fueled higher revenues. The Zacks Consensus Estimate for third-quarter revenues stands at $942 billion, suggesting 12.8% growth from the year-earlier quarter's reported figure.

Meanwhile, Progressive’s personal auto business is likely to have benefited from its 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.

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

Progressive is also likely to have witnessed new business application growth in its bundled auto and home customers (i.e., Robinsons) in both the Agency and Direct channels.

A not-so-active catastrophe environment and better pricing might have aided underwriting profit.

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

The Zacks Consensus Estimate for earnings is pegged at $1.33, indicating 15.6% decline from the year-ago quarter's reported number.

The Progressive Corporation Price and EPS Surprise

The Progressive Corporation Price and EPS Surprise

The Progressive Corporation price-eps-surprise | The Progressive Corporation Quote

What the Zacks Model Says

Our proven shows that Progressive is likely to beat estimates in the to-be-reported quarter. This is because the stock 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 +1.37%. This is because the Most Accurate Estimate of $1.33 is pegged higher than the Zacks Consensus Estimate of $1.31. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

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 Key Picks

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

Arthur J. Gallagher & Co. AJG has an Earnings ESP of +2.53% and a Zacks Rank of 3. The company is slated to announce third-quarter 2019 earnings on Oct 24. You can see the complete list of today’s Zacks #1 Rank stocks here..

American International Group, Inc. AIG has an Earnings ESP of +4.03% and a Zacks Rank #3. The company is slated to announce third-quarter 2019 results on Oct 30.

Radian Group RDN  is set to report third-quarter 2019 results on Oct 30. The stock has an Earnings ESP of +1.89% and a Zacks Rank of 2.

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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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