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Can Progressive (PGR) Earnings Pull Off a Surprise in Q2?

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The Progressive Corporation (PGR - Free Report) is slated to report second-quarter 2022 earnings on Jul 15 before the opening bell. The company delivered a negative earnings surprise of 9.68% in the last reported quarter.

Factors to Note    

A compelling product portfolio, a leadership position, strength in the Vehicle and Property businesses, healthy policies in force and retention are likely to have aided an improvement in net premiums earned in the second quarter of 2022. The Zacks Consensus Estimate for net premiums earned is pegged at $12.2 billion, suggesting growth of 11.5% from the year-ago reported number.

Policies in force are likely to have improved, given the focus on segmentation and prudent risk selection. The Zacks Consensus Estimate for personal lines policies in force stands at 23.8 million, indicating an improvement of 4.4% from the year-ago reported figure.

The investment income is likely to have improved, given its higher-invested asset base and a rise in interest rates. The Zacks Consensus Estimate for the metric is pegged at $248 million.

Improved premiums, an increase in service revenues and fees and other revenues might have contributed to the improvement in revenues. The Zacks Consensus Estimate for second-quarter revenues stands at $12.7 billion, suggesting year-over-year growth of approximately 11.3%.

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

Expenses might have risen on a higher loss and loss-adjustment expenses and policy acquisition costs and other underwriting expenses. The consensus mark for the loss and loss-adjustment expense ratio is pegged at 76.

The Zacks Consensus Estimate for earnings is pegged at 90 cents, indicating a 40.4% decrease from the year-ago quarter.

What the Zacks Model Says

Our proven model predicts an earnings beat for Progressive this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Earnings ESP: Progressive has an Earnings ESP of +4.83%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: PGR currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Here are three other P&C insurance stocks you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

The Travelers Companies (TRV - Free Report) has an Earnings ESP of +11.32% and a Zacks Rank of 3. The Zacks Consensus Estimate for second-quarter 2022 earnings is pegged at $2.06, indicating a decrease of 40.3% from the year-ago reported figure.

TRV’s earnings beat estimates in each of the four trailing quarters.

Cincinnati Financial Corporation (CINF - Free Report) has an Earnings ESP of +2.86% and a Zacks Rank #3. The Zacks Consensus Estimate for second-quarter 2022 earnings is pegged at $1.05, down 41.3% from the figure reported in the year-ago quarter.

CINF beat earnings estimates in each of the four trailing quarters.

Everest Re Group (RE - Free Report) has an Earnings ESP of +13.61% and a Zacks Rank of 2. The Zacks Consensus Estimate for second-quarter 2022 earnings stands at $9.75, indicating a decline of 33.4% from the year-ago reported figure.

RE beat earnings estimates in two of the last four reported quarters while missing the same in the other two.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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