Progressive (PGR) Upgraded to Buy: Will You Add the Stock? - Analyst Blog

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On Sep 10, Zacks Investment Research upgraded Progressive Corp. ( PGR ) to a Zacks Rank #2 (Buy).

Why the Upgrade?

Progressive Corp. has been witnessed rising earnings estimates on the back of strong second-quarter 2014 results and well as solid July operating statistics. Moreover, this property and casualty insurer delivered positive earnings surprises in last four quarters, with an average beat of 15.1%.

Progressive reported second-quarter earnings per share of 60 cents, surpassing the Zacks Consensus Estimate by 27.7% and year-ago earnings by 50%. Top line also fared well on both counts.

Progressive continues to improve premium writings with net premiums increasing 5% in the quarter. An improved combined ratio further testifies its solid underwriting results with underwriting income increasing 16% on more favorable loss experience. Underwriting margin of 7.4% expanded 70 basis points and bettered the long-term goal of 4%. Policies in force remained healthy with an increase of 3%.

With respect to returning value to shareholders, Progressive bought back 1.8 million shares for $45.3 million in the quarter. Lower share count on account of share repurchases provided an upside to the bottom line.

Its July results were also strong with both top and bottom lines showing improvement on higher premiums and healthy policies in force.

The strong performance prompted a rise in the Zacks Consensus Estimate for 2014 in the last 60 days. It increased about 2% to $1.66 as 6 of 14 estimates moved north. The expected long-term growth rate for the stock is 6.4%.

Other Stocks to Consider

Investors interested in the property and casualty industry can also consider Mercury General Corp. ( MCY ), AmTrust Financial Services, Inc. ( AFSI ) and Endurance Specialty Holdings Ltd. ( ENH ). All these stocks sport a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

PROGRESSIVE COR (PGR): Free Stock Analysis Report

AMTRUST FIN SVC (AFSI): Free Stock Analysis Report

ENDURANCE SPLTY (ENH): Free Stock Analysis Report

MERCURY GENL CP (MCY): Free Stock Analysis Report

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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.

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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