Back to top

Image: Bigstock

Why You Should Still Hold onto Progressive (PGR) Stock

Read MoreHide Full Article

Shares of Progressive Corp. (PGR - Free Report) outperformed the Property and Casualty Insurance industry in the last three months. While Progressive shares gained 12.28%, the industry gained 10.59%. In fact, shares of the company hit a new 52-week high of $36.59 on Jan 12, and finally closed the trading session at $36.47, gaining 0.4%.



Progressive stands to benefit from its compelling product, service and distribution innovation, especially in personal auto. The insurer’s expanded multi-product offering and competitive rates in all its markets will continue to drive premiums for the company. Progressive reported increased premiums for Oct and Nov 2016, which drove the bottom line higher.

Sustained focus on customer retention and strategic acquisitions raise optimism about the company’s overall results. Also, strong operational results enable the company to engage in effective capital deployment activities and shareholder-friendly moves.

Notably, the company saw its estimates being revised upward ahead of the earnings. The expected long-term earnings growth rate is currently pegged at 9%.

Valuation remains attractive at current level. The P/E ratio is 18%, a discount of 29% to the industry average. Return on equity of 12.3% is higher than the industry average of 7.0%.

Progressive is scheduled to report fourth-quarter earnings on Jan 25, before the market opens. However, our proven model does not conclusively show that it is likely to beat on earnings this time around. This is because the company has a favorable Zacks Rank #3 (Hold) but an Earnings ESP of 0.00%, which makes surprise prediction difficult.  The company delivered positive surprises in two of the last four quarters but with an average miss of 0.95%.

Stocks to Consider

Some better-ranked property and casualty insurers are Arch Capital Group Ltd. (ACGL - Free Report) , Everest Re Group Limited and OneBeacon Insurance Group, Ltd. (OB - Free Report) .  All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arch Capital offers property, casualty, and mortgage insurance and reinsurance products worldwide. It delivered positive surprises in all of the last four quarters with an average beat of 9.27%.

Everest Re, which writes P&C, reinsurance and insurance in the U.S., Bermuda and international markets, delivered positive surprises in three of the last four quarters with an average beat of 25.64%.

OneBeacon Insurance, a provider of specialty P&C insurance products and services, delivered positive surprises in three of the last four quarters with an average beat of 35.82%.

Zacks’ Best Private Investment Ideas

In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time? Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Outbrain Inc. (OB) - free report >>

The Progressive Corporation (PGR) - free report >>

Arch Capital Group Ltd. (ACGL) - free report >>

Published in