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Can Progressive (PGR) Retain Earnings Beat Streak in Q2?


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

Factors to be Considered in Q2

The top line is likely to have witnessed improvement in the to-be-reported quarter, driven by an expected increase in premiums, investment income coupled with higher service revenues and fees as well as other revenues. The Zacks Consensus Estimate for the period’s revenues is pegged at $7.9 billion, up 19.7%.

Solid policies in force are anticipated to have improved premiums in the second quarter.

Strong performing Vehicle and Property businesses might have benefited Personal and Commercial business lines.

The company’s continued spending on marketing and competitive product offerings plus a sturdy market presence should consistently drive personal auto business.

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

The company’s Property business has already gained traction. Given its expanded footprint and a compelling product offering, the Property business is expected to have delivered solid results.

Though there were cat events like rain storms in the United States, underwriting results will still be not severely hampered. A Morgan Stanley analyst estimates global insured cat loss of about $7.1 billion in the quarter under consideration. The analyst also noted that the tally is much lower than the general figure of around $14 billion that insurers have suffered in any given second quarter.

The Zacks Consensus Estimate is pegged at $1.07 per share, reflecting 81.4% year-over-year growth.

With respect to the earnings trend, the company delivered positive surprises in three of the last four quarters with an average beat of 6.23%.

The Progressive Corporation Price and EPS Surprise

What the Quantitative Model Says

Our proven model shows that Progressive is likely to beat estimates this quarter to be reported. This is because the stock has 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.

Zacks ESP: Progressive has an Earnings ESP of +4.85% as the Most Accurate estimate of $1.12 is pegged higher than the Zacks Consensus Estimate of $1.07. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Progressive sports a Zacks Rank of 1, 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

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

The Travelers Companies, Inc. TRV is set to report second-quarter earnings on Jul 19. This #3 Ranked stock has an Earnings ESP of +3.69%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chubb Limited CB is set to report second-quarter earnings on Jul 24. The stock has an Earnings ESP of +1.90% and a Zacks Rank #3.

Axis Capital Holdings Limited AXS has an Earnings ESP of +11.40%. This Zacks #3 Ranked company is set to report second-quarter earnings on Jul 25.

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