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Progressive (PGR) to Report Q3 Earnings: Is a Beat in Store?

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The Progressive Corporation (PGR - Free Report) is slated to report third-quarter 2020 results on Oct 14, before market open. The company delivered a positive surprise of 6.40% in the second quarter of 2020.

Factors to Consider   

Premiums in the third quarter are likely to have benefited from solid policies in force, higher retention, competitive rates and compelling product portfolio.

Solid performing Vehicle and Property businesses are expected to have supported Personal and Commercial business lines.

Focus on segmentation and risk selection might have aided policies in force. The Zacks Consensus Estimate for personal lines policies in force is pegged at 21,219 million, indicating an increase of 10.2% from the year-ago reported quarter.

Improved premiums, increase in service revenues and fees as well as other revenues are likely to have fueled revenues. The Zacks Consensus Estimate for third-quarter revenues stands at $10.6 billion, suggesting 7.3% year-over-year growth.

Progressive is a leading auto insurers in the United States, boasting one of the largest auto insurance groups. It is also the largest seller of motorcycle policies, the market leader in commercial auto insurance and one of the top 15 homeowners carriers based on premiums written.  Its personal auto business is likely to have benefited from its focus on marketing and competitive product offerings as well as strong market presence.

Nonetheless, the insurer bore the brunt of hurricanes Isaias and Laura, and tornadoes throughout the Midwest. The third quarter generally experiences active hurricane season. Nonetheless, better pricing and exposure growth are likely to have aided underwriting profit.

Expenses might have risen on higher loss and loss-adjustment expenses, and policy acquisition costs plus other underwriting expenses. Nonetheless, loss and loss adjustment expenses ratio is likely to have improved in the quarter, attributable to decrease in auto accident frequency given the stay-at-home trend. The consensus estimate for Personal Line loss and loss adjustment expenses ratio is pegged at 73.

The Zacks Consensus Estimate for earnings is pegged at $1.71, indicating 20.4% increase from the year-ago quarter's reported number.

What the Zacks Model Says

Our proven model predicts an earnings beat for Progressive this time around. This is because the stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to increase the odds of an earnings beat.

Earnings ESP: Progressive has an Earnings ESP of +0.60%. This is because the Most Accurate Estimate of $1.72 is pegged higher than the Zacks Consensus Estimate of $1.71. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Progressive currently carries a Zacks Rank of 3.

Key Picks

Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

NMI Holdings (NMIH - Free Report) has an Earnings ESP of +1.47% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

CNO Financial (CNO - Free Report) has an Earnings ESP of +2.52% and a Zacks Rank #3.

Prudential Financial (PRU - Free Report) has an Earnings ESP of +1.74% and a Zacks Rank of 3.

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