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Strength Seen in Progressive (PGR): Can Its 5.8% Jump Turn into More Strength?

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Progressive (PGR - Free Report) shares soared 5.8% in the last trading session to close at $142.87. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 4.9% loss over the past four weeks.

A compelling portfolio, leadership position, strength in the Vehicle and Property businesses, healthy policies in force, retention and solid capital position continue to drive PGR.

Progressive 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. A compelling product portfolio, leadership position, healthy policies in force, better pricing and a solid retention ratio should help PGR improve its premium.

Strategic initiatives like distinctive new auto insurance option, cross-selling homes with auto insurance should continue to drive higher policy life expectancy. Prudent underwriting has helped Progressive deliver a combined ratio of less than 93%, on average, in a decade.

This insurer is expected to post quarterly earnings of $1.59 per share in its upcoming report, which represents a year-over-year change of +42%. Revenues are expected to be $14.06 billion, up 14.5% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Progressive, the consensus EPS estimate for the quarter has been revised 8.9% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on PGR going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Progressive is a member of the Zacks Insurance - Property and Casualty industry. One other stock in the same industry, American Financial Group (AFG - Free Report) , finished the last trading session 3.5% higher at $120.02. AFG has returned -12.2% over the past month.

American Financial's consensus EPS estimate for the upcoming report has changed -0.6% over the past month to $2.88. Compared to the company's year-ago EPS, this represents a change of -19.1%. American Financial currently boasts a Zacks Rank of #3 (Hold).


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