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Anatomy of Success: Progressive (PGR)

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Investors are always on the hunt for companies that are positioned to witness massive returns, but consistently finding these types of stocks is a difficult task. Luckily, the proven Zacks Rank model makes this process much simpler.

The Zacks Rank system harnesses the power of earnings estimates and estimate revisions to find companies that are on track to outpace the market over the next one to three months. Only about 5% of stocks tracked by Zacks earn a Zacks Rank #1 (Strong Buy), so investors can rest assured that these are the strongest options available.

In the story below, you will learn about one particular company that helped illustrate the strength of the Zacks Rank. If investors had followed this model when it flagged this insurance behemoth, they would have witnessed massive gains.

The Progressive Corporation (PGR - Free Report)

Progressive provides personal and commercial property-casualty insurance, and other specialty property-casualty insurance and related services primarily in the United States. The stock has reached the #1 (Strong Buy) designation several times over the past year, with enormous success following shortly thereafter.

For instance, Progressive was given a Zacks Rank #1 (Strong Buy) on April 14, 2017. The company’s earnings outlook was likely improving ahead of its report date just four days later. In that report, Progressive would post earnings growth of 59.5%; total revenues came in at $6.27 billion, up 13.2% year over year and ahead of our consensus estimate of $6.15 billion.

PGR would surge 9.6% and never dipped below a #3 (Hold) before being added to the Zacks Rank #1 (Strong Buy) list again on June 30. This time around, the stock spent three weeks in the top spot and would pick up even more steam. Shares eventually surged as much as 26.3% before PGR reached its third #1 (Strong Buy) on Jan. 5.

This third designation also came shortly before Progressive reported its latest quarterly financial results. Just a few weeks later, the company would post adjusted earnings of 79 cents per share, beating the Zacks Consensus Estimate of 77 cents and improving 27.4% from the year-ago period. Quarterly revenues totaled $7.13 billion, marking growth of 18.8%.

The below chart demonstrates the price performance for PGR and 12-month forward looking EPS estimate (in red), starting from the time the stock first earned a Zacks Rank #1 (Strong Buy).

 

As we can see, PGR has been a huge winner for those that followed the Zacks Rank. The stock is currently up about 55.9% since earning a Zacks Rank #1 (Strong Buy) last year. Investors should know that our model is the simplest way to identify elite stocks poised to beat the market on a consistent basis.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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