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Progressive (PGR) Up 38% in a Year: Can it Retain the Momentum?

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The Progressive Corporation’s (PGR - Free Report) shares have gained 38.1% in a year against the industry’s decrease of 5.1%. The Finance sector and the Zacks S&P 500 composite declined 6.8% and 8.4%, respectively, in the same time frame. With a market capitalization of $84.1 billion, the average volume of shares traded in the last three months was about 2.3 million.

A compelling portfolio, leadership position, strength in Vehicle and Property businesses, healthy policies in force, retention and solid capital position continue to drive this Zacks Rank #3 (Hold) insurer.

Will the Bull Run Continue?

The Zacks Consensus Estimate for Progressive’s 2023 earnings is pegged at $6.66 per share, indicating an increase of 64% on 13.6% higher revenues of $58.5 billion. The Zacks Consensus Estimate for 2024 earnings is pegged at $8.03, indicating an increase of 20.6% on 10.5% higher revenues of $64.6 billion. The long-term earnings growth rate is currently pegged at 23.6%, better than the industry average of 14.5%.

Progressive is the largest seller of motorcycle and boat policies, a market leader in commercial auto insurance and one of the top 15 homeowner carriers based on premiums written. PGR’s net premiums written increased 11% in the last 10 years and surpassed the industry average of 4%. Banking on a compelling product portfolio, leadership position, healthy policies in force, better pricing and a solid retention ratio, the insurer is poised to retain the growth momentum.

Policy life expectancy, a measure of customer retention, has improved in the last few years across all business lines. Strategic initiatives to provide consumers with a distinctive new auto insurance option along with competitive pricing should help Progressive retain its momentum. The insurer thus has been focusing on cross-selling homes with auto insurance.

Banking on prudent underwriting, PGR’s combined ratio averaged less than 93% in a decade and compared favorably with the industry average combined ratio of more than 100%. Though combined ratio deteriorated in 2022, prudent underwriting, favorable reserve development should help improve the metric.

In tandem with the industry, PGR continues to heavily invest in technology. It estimates accelerated digitalization to improve non-acquisition ratio in 2023.

The company’s operational excellence supports a solid capital position that enhances shareholders’ value. Progressive has been paying dividends uninterruptedly since 1971 and has a 24.4 million share buyback program under its authorization.

Stocks to Consider

Some better-ranked stocks from the insurance industry are Axis Capital Holdings (AXS - Free Report) , Everest Re Group and Kinsale Capital Group (KNSL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Axis Capital delivered four quarter average surprise of 5.70%. In the past year, AXS has gained 10%.

The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings represent year-over-year increase of 29.6% and 11.8% respectively.  

Everest delivered four quarter average surprise of 18.41%. In the past year, RE has rallied 37.7%.

The Zacks Consensus Estimate for RE’s 2023 and 2024 earnings indicate respective year-over-year increase of 70% and 15.7%.

Kinsale delivered four quarter average surprise of 13.83%. In the past year, the insurer has gained 48.3%.

The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings indicate respective year-over-year increase of 26.4% and 20.2%.

See More Zacks Research for These Tickers

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Axis Capital Holdings Limited (AXS) - free report >>

The Progressive Corporation (PGR) - free report >>

Kinsale Capital Group, Inc. (KNSL) - free report >>

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