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Progressive (PGR) Up 16% YTD: Can it Retain the Momentum?

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Shares of The Progressive Corporation (PGR - Free Report) have rallied 16.3% year to date, outperforming the industry’s increase of 4.5%. In contrast, the Finance sector and the Zacks S&P 500 composite have declined 10.5% and 14.4%, respectively in the same time frame. With a market capitalization of $70.4 billion, the average volume of shares traded in the last three months was 2.8 million.

PGR has a VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.

A compelling product portfolio, leadership position, strength in both Vehicle and Property businesses, healthy policies in force and retention continue to drive PGR. The Zacks Consensus Estimate for 2022 and 2023 earnings has moved north by a cent each in the past 30 days, reflecting analysts’ optimism.  

Return on equity in the trailing 12 months was 12.8%, better than the industry average of 5.7%.

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Can PGR Retain the Momentum?

The Zacks Consensus Estimate for 2022 earnings is pegged at $4.77, indicating an increase of 8.2% on 10.7% higher revenues of $51.2 billion. The consensus estimate for 2023 earnings is pegged at 6.34, indicating an increase of 33.1% on 14.5% higher revenues of $58.6 billion.

The long-term earnings growth rate is currently pegged at 17.3%, better than the industry average of 10.5%. PGR has a Growth Score of B. This style score analyzes the growth prospects of a company.

This Zacks Rank #3 (Hold) company is 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. Net premium written grew 11% in the last 10 years, outperforming the industry average of 4%.  

Policy life expectancy (PLE), a measure for customer retention, has been exhibiting improvement over the last few years across all its business lines. Several strategic endeavors that are aimed at providing consumers with a distinctive new auto insurance option should help Progressive maintain solid PLE.

Progressive has been consistently putting in efforts to further penetrate customer households through cross-selling auto policies and Progressive Home Advantage. Growth momentum at Progressive’s Robinson (bundled home and auto) continued with policies-in-force growth of about 30%.

Over the last 10 years (2011-2021), PGR’s combined ratio has averaged less than 93%, which compares favorably with the industry average combined ratio of more than 100%. This reflects its superior underwriting discipline.

Progressive has been paying dividends uninterruptedly since 1971, apart from buying back shares. Recently, the board of directors approved a 25 million share buyback program.

Stocks to Consider

Some better-ranked stocks from the same space are HCI Group, Inc. (HCI - Free Report) , are American Financial Group, Inc. (AFG - Free Report) and W.R. Berkley Corporation (WRB - Free Report) .  While HCI sports a Zacks Rank #1 (Strong Buy), AFG and WRB carry Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 30 days. In the past year, HCI Group stock has lost 18%.

The Zacks Consensus Estimate for 2022 and 2023 earnings per share indicates year-over-year increases of 700% and 75%, respectively.

American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has rallied 3.5%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 30 days.

W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.76%. In the past year, W.R. Berkley's stock has surged 38.7%.

The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 6.3% and 6.2% north, respectively, in the past 60 days.