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What’s in Store for Progressive (PGR) This Earnings Season?


The Progressive Corporation PGR is slated to report first-quarter 2018 results on Apr 17 before the market opens. Last quarter, the company delivered a positive surprise of 2.60%.

Factors to be Considered This Quarter

An expected increase in premiums, investment income coupled with higher service revenues and fees as well as other revenues are likely to have driven the top line in the to-be-reported quarter. The Zacks Consensus Estimate for the period’s revenues is pegged at $7.34 billion, up 17.1%.

Both Personal and Commercial business lines are expected to have been benefited by strong a momentum in both its Vehicle and Property businesses. Thus, solid policies in force are anticipated to have improved premiums in the quarter.

A solid retention ratio is attributable to diversified product portfolio as well as competitive pricing. Snapshot, Robinson and Home Quote Explorer programs are estimated to have boosted the business too.

However, expenses might have increased due to higher losses and loss adjustment expenses, policy acquisition costs plus other underwriting expenses.

Though there were cat events like the California mudslide and the northeast winter storms dominating the start of the year, underwriting results will still not be hampered to a greater degree. A Morgan Stanley analyst estimates global insured cat loss in the first quarter between $5 billion and $10 billion, much lower than losses incurred in the past years.

The Zacks Consensus Estimate is pegged at $1.19 per share, reflecting 77.6% year-over-year growth.

With respect to the earnings trend, the company delivered positive surprises in two of the last four quarters with an average beat of 5.01%.

The Progressive Corporation Price and EPS Surprise

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

What the Quantitative Model Says

Our proven model does not conclusively show that Progressive is likely to beat estimates this quarter. This is because a stock must have the right combination of the two main ingredients — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. But that is not the case here as you can see below.

Zacks ESP: Progressive has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.19. 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 #3, which increases the predictive power of ESP. However, an earnings ESP of 0.00% makes surprise prediction difficult.

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

Stocks to Consider

A few stocks worth considering from the insurance industry with the right combination of elements to come up with an earnings beat this time around are:

Markel Corporation MKL is set to report first-quarter earnings on Apr 25. The stock has an Earnings ESP of +11.71 % and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Travelers Companies, Inc. TRV is set to report first-quarter earnings on Apr 24. This #2 Ranked stock has an Earnings ESP of +0.58%.

The Allstate Corporation ALL has an Earnings ESP of +2.51%. This Zacks #3 Ranked company is set to report first-quarter earnings on May 1.

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