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Analyst Blog

On Jun 25, Zacks Investment Research upgraded Progressive Corp. (PGR - Free Report) to a Zacks Rank #2 (Buy).

Why the Upgrade?

Progressive's earnings estimates have been rising on the back of the company's consistent strong performance.

The company’s first-quarter 2013 earnings were ahead of both the Zacks Consensus Estimate and the year-ago figure. Progressive has been reporting year-over-year improvement over the last two months as well.

The long-term expected earnings growth rate for this stock is 8.5%.    

In April and May, the company generated a total of 42 cents in earnings, with premiums increasing year over year for both months.

Progressive’s operating earnings and premiums’ growth as well as debt-to-total capital ratio in the last two months of this year reflect an overall constant improvement. Current policies in force also remained healthy. Progressive remains focused on maintaining a healthy policy life expectancy, which is a significant measure to retain customers.

We expect Progressive to surpass expectations when it reports its second-quarter results on Jul 11.  Our proven model shows that the property & casualty insurer is likely to beat earnings because it has a right combination of a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #2 (Buy). ESP or Expected Surprise Prediction, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +5.1%.

Additionally, for the second quarter the Zacks Consensus Estimate is pegged at 39 cents, up 96% year over year.

The Zacks Consensus Estimate for 2013 increased 4.7% to $1.56 per share as most of the estimates were revised higher over the last 30 days. For 2014, more than half of the estimates were revised higher over the same period, lifting the Zacks Consensus Estimate by 3.1% to $1.65 per share.

Other Stocks to Consider

Apart from Progressive, The Hanover Insurance Group Inc. (THG - Free Report) , HCI Group, Inc. , and Hilltop Holdings Inc. (HTH - Free Report) are also worth considering. All these carry a Zacks Rank #1 (Strong Buy).

In-Depth Zacks Research for the Tickers Above

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Progressive Corporation (The) (PGR) - free report >>

Hilltop Holdings Inc. (HTH) - free report >>

The Hanover Insurance Group, Inc. (THG) - free report >>