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What Should You Do With Progressive Stock Ahead of Q4 Earnings?
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The Progressive Corporation (PGR - Free Report) is expected to register an improvement in its top and bottom lines when it reports fourth-quarter 2024 results on Jan. 29, before the opening bell.
The Zacks Consensus Estimate for PGR’s fourth-quarter revenues is pegged at $19.8 billion, indicating 19.5% growth from the year-ago reported figure.
The consensus estimate for earnings is pegged at $3.43 per share. The Zacks Consensus Estimate for PGR’s fourth-quarter earnings has moved up 2.7% in the past 30 days. The estimate suggests year-over-year growth of 15.9%.
Image Source: Zacks Investment Research
Solid Earnings Surprise History
Progressive’s earnings beat the Zacks Consensus Estimates in each of the trailing four quarters, the average surprise being 19.85%. This is depicted in the following chart.
Image Source: Zacks Investment Research
What the Zacks Model Unveils for PGR
Our proven model predicts an earnings beat for Progressive this time around. 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.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: PGR has an Earnings ESP of +3.13%. This is because the Most Accurate Estimate of $3.54 is pegged higher than the Zacks Consensus Estimate of $3.43.
The Progressive Corporation Price and EPS Surprise
Revenues in the fourth quarter are likely to have benefited from improvement in premiums, and higher net investment income as well as fees and service revenues.
Net premiums earned are expected to have been aided by a compelling product portfolio, leadership position, strength in the Vehicle and Property businesses, healthy policies in force and solid retention. The Zacks Consensus Estimate for net premiums earned is pegged at $18.7 billion.
The personal auto business benefited from competitive product offerings and strong market presence. The company’s focus on segmentation and prudent risk selection is likely to have benefited policies in force.
Net investment income benefited from a higher invested asset base coupled with improved interest rate. The Zacks Consensus Estimate for the metric is pegged at $772.6 million.
However, higher loss and loss-adjustment expenses, policy acquisition costs and other underwriting expenses are likely to have raised expenses. The consensus mark for loss and loss-adjustment expense ratio is pegged at 69.1.
Despite catastrophe losses, prudent underwriting is likely to have aided improvement in the combined ratio. The consensus mark for combined ratio is pegged at 89.8.
PGR’s Price Performance & Premium Valuation
The stock outperformed the industry, sector and the Zacks S&P 500 composite index in 2024.
Image Source: Zacks Investment Research
PGR stock is not that cheap, as its Value Score of C suggests a stretched valuation at this moment.
Image Source: Zacks Investment Research
The stock is trading at a price-to-book value of 5.17X, higher than the industry’s 1.56X. It is also expensive compared with other industry players like The Allstate Corporation (ALL - Free Report) and The Travelers Corporation (TRV - Free Report) .
Investment Thesis
Progressive bundles auto with lower-risk properties. Segmentation through the rollout of the newest product model coupled with prudent pricing will improve policy life expectancy, a measure of customer retention. Progressive has also been making investments to ramp up digitalization. All these combined should continue to fuel growth. PGR has a Growth Score of A.
PGR’s combined ratio averaged less than 93% in the last 10 years and compared favorably with the industry average of more than 100%. Prudent underwriting coupled with favorable reserve development, a reinsurance program to shield its balance sheet from the impact of catastrophe events and active weather years should limit the erosion of profit.
PGR’s solid capital helps it navigate a volatile market and invest in growth opportunities.
Though leverage compares unfavorably with the industry average, its debt-servicing capabilities remain solid and also compare favorably with the industry.
Parting Thoughts on PGR Stock
Progressive is one of the nation’s largest auto insurance groups, the largest seller of motorcycle and boat policies, the market leader in commercial auto insurance, and one of the top 15 homeowners carriers based on premiums written. It remains committed to enhancing customers' experience through improved services.
Despite increasing expenses, PGR remains committed to expanding margins.
Its impressive dividend history, its VGM Score of A, growth prospects, favorable return on capital and positive investor sentiment instill confidence.
However, given its premium valuation, new investors can wait for a better entry point, while those owing PGR stock currently should retain it in their portfolio.
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What Should You Do With Progressive Stock Ahead of Q4 Earnings?
The Progressive Corporation (PGR - Free Report) is expected to register an improvement in its top and bottom lines when it reports fourth-quarter 2024 results on Jan. 29, before the opening bell.
See the Zacks Earnings Calendar to stay ahead of market-making news.
The Zacks Consensus Estimate for PGR’s fourth-quarter revenues is pegged at $19.8 billion, indicating 19.5% growth from the year-ago reported figure.
The consensus estimate for earnings is pegged at $3.43 per share. The Zacks Consensus Estimate for PGR’s fourth-quarter earnings has moved up 2.7% in the past 30 days. The estimate suggests year-over-year growth of 15.9%.
Image Source: Zacks Investment Research
Solid Earnings Surprise History
Progressive’s earnings beat the Zacks Consensus Estimates in each of the trailing four quarters, the average surprise being 19.85%. This is depicted in the following chart.
Image Source: Zacks Investment Research
What the Zacks Model Unveils for PGR
Our proven model predicts an earnings beat for Progressive this time around. 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.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: PGR has an Earnings ESP of +3.13%. This is because the Most Accurate Estimate of $3.54 is pegged higher than the Zacks Consensus Estimate of $3.43.
The Progressive Corporation Price and EPS Surprise
The Progressive Corporation price-eps-surprise | The Progressive Corporation Quote
Zacks Rank: PGR carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Likely to Shape Q4 Results
Revenues in the fourth quarter are likely to have benefited from improvement in premiums, and higher net investment income as well as fees and service revenues.
Net premiums earned are expected to have been aided by a compelling product portfolio, leadership position, strength in the Vehicle and Property businesses, healthy policies in force and solid retention. The Zacks Consensus Estimate for net premiums earned is pegged at $18.7 billion.
The personal auto business benefited from competitive product offerings and strong market presence. The company’s focus on segmentation and prudent risk selection is likely to have benefited policies in force.
Net investment income benefited from a higher invested asset base coupled with improved interest rate. The Zacks Consensus Estimate for the metric is pegged at $772.6 million.
However, higher loss and loss-adjustment expenses, policy acquisition costs and other underwriting expenses are likely to have raised expenses. The consensus mark for loss and loss-adjustment expense ratio is pegged at 69.1.
Despite catastrophe losses, prudent underwriting is likely to have aided improvement in the combined ratio. The consensus mark for combined ratio is pegged at 89.8.
PGR’s Price Performance & Premium Valuation
The stock outperformed the industry, sector and the Zacks S&P 500 composite index in 2024.
Image Source: Zacks Investment Research
PGR stock is not that cheap, as its Value Score of C suggests a stretched valuation at this moment.
Image Source: Zacks Investment Research
The stock is trading at a price-to-book value of 5.17X, higher than the industry’s 1.56X. It is also expensive compared with other industry players like The Allstate Corporation (ALL - Free Report) and The Travelers Corporation (TRV - Free Report) .
Investment Thesis
Progressive bundles auto with lower-risk properties. Segmentation through the rollout of the newest product model coupled with prudent pricing will improve policy life expectancy, a measure of customer retention. Progressive has also been making investments to ramp up digitalization. All these combined should continue to fuel growth. PGR has a Growth Score of A.
PGR’s combined ratio averaged less than 93% in the last 10 years and compared favorably with the industry average of more than 100%. Prudent underwriting coupled with favorable reserve development, a reinsurance program to shield its balance sheet from the impact of catastrophe events and active weather years should limit the erosion of profit.
PGR’s solid capital helps it navigate a volatile market and invest in growth opportunities.
Though leverage compares unfavorably with the industry average, its debt-servicing capabilities remain solid and also compare favorably with the industry.
Parting Thoughts on PGR Stock
Progressive is one of the nation’s largest auto insurance groups, the largest seller of motorcycle and boat policies, the market leader in commercial auto insurance, and one of the top 15 homeowners carriers based on premiums written. It remains committed to enhancing customers' experience through improved services.
Despite increasing expenses, PGR remains committed to expanding margins.
Its impressive dividend history, its VGM Score of A, growth prospects, favorable return on capital and positive investor sentiment instill confidence.
However, given its premium valuation, new investors can wait for a better entry point, while those owing PGR stock currently should retain it in their portfolio.