A month has gone by since the last earnings report for The Progressive CorporationPGR . Shares have added about 5.9% in the past month, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Progressive's Q1 Earnings Lag, Revenues Top Estimates
Progressive's first-quarter 2017 operating earnings per share of $0.67 missed the Zacks Consensus Estimate by 1.5%. Earnings, however, improved nearly 60% year over year.
Including net realized gains, net income per share was $0.73, up about 65% year over year.
Behind the Headlines
Progressive recorded net premiums written of $6.5 billion in the quarter under review, up 12% from $5.8 billion in the year-ago quarter. Net premiums earned grew 13% year over year from $5.3 billion to $6.0 billion.
Net realized gains on securities were $51.9 million, up 198% year over year. Combined ratio − the percentage of premiums paid out as claims and expenses − improved 290 basis points (bps) from the prior-year quarter to 91.7%.
Operating revenues improved 13% year over year to $6.3 billion in the quarter. The top-line growth was driven by a 13% increase in premiums, 8% higher fees and other revenues, 9% rise in investment income and 14% jump in service revenues. Revenues surpassed the Zacks Consensus Estimate of $6.2 billion.
Total expense increased 10% to $5.7 billion. The increase in expenses can be primarily attributed to 9% higher losses and loss adjustment expenses, 14% increase in policy acquisition costs and 12% higher other underwriting expenses.
Numbers in March
In Mar 2017, policies in force were impressive with the Personal Auto segment improving 8% from Mar 2016 to 10.8 million. Special Lines inched up 3% from the prior-year month to 4.3 million.
In Progressive's Personal Auto segment, Direct Auto grew 8% year over year to 5.6 million. Agency Auto increased 7% from the comparable year-ago month to 5.2 million.
Progressive's Commercial Auto segment grew 6% year over year to 0.6 million. The Property business had about 1.3 million policies in force in the reported month, up 17% year over year.
Progressive's book value per share was $14.67 as of Mar 31 2017, up 13% from $12.97 as of Mar 31, 2016.
Return on equity on a trailing 12-month basis was 17.4%, up 330 bps from 14.2% in Dec 2016. Debt-to-total capital ratio too deteriorated 40 bps year over year to 26.7% as of Mar 31, 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been four upward revisions for the current quarter compared to one lower. In the past month, the consensus estimate has moved up by 7% due to these changes.
The Progressive Corporation Price and Consensus
At this time, the stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Following the exact same course, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line return from the stock in the next few months.
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