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We expect Progressive Corp. (PGR - Analyst Report) to beat expectations when it reports first-quarter 2013 results on Apr 10.

Why a Likely Positive Surprise?

Our proven model shows that Progressive is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: The Most Accurate Estimate for the company is at 45 cents, and the Zacks Consensus Estimate is at 43 cents. As a result, Earnings ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at +4.65%.

Zacks Rank #1 (Strong Buy): Note that stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of an earnings beat. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.  

The combination of Progressive’s Zacks Rank # 1 (Strong Buy) and +4.65% ESP makes us very confident regarding an earnings beat on Apr 10.

What is Driving the Better Than Expected Earnings?

Progressive’s operating earnings and premiums’ growth as well as debt-to-total capital ratio in the first two months of this year reflect overall constant improvement. Policies in force also remained healthy with both Personal Auto and Special Lines delivering growth. Progressive remains focused on maintaining a healthy policy life expectancy, which is a significant measure to retain customers.

The Commercial Auto business is also recording year-over-year growth over the past few months.

The company generated a total of 39 cents in earnings per share in Jan and Feb, 2013.

We believe that the company is poised to benefit from impressive operating performances and its market leading position.

Other Stocks to Consider

Progressive is not the only firm looking up this earnings season. We also see likely earnings beats coming from these 3 industry peers:

Arch Capital Group Ltd. (ACGL - Snapshot Report), Earnings ESP of +12.8% and a Zacks Rank #1 (Strong Buy).

AXIS Capital Holdings Limited (AXS - Analyst Report), Earnings ESP of +8.0% and a Zacks Rank #1 (Strong Buy).

Everest Re Group Ltd. (RE - Analyst Report), Earnings ESP of +3.96% and a Zacks Rank #1 (Strong Buy).

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