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Why Is Progressive (PGR) Up 10.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Progressive (PGR - Free Report) . Shares have added about 10.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Progressive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Progressive Q4 Earnings Miss Estimates, Premiums Rise Y/Y
Progressive Corporation’s fourth-quarter 2018 operating earnings per share of 44 cents lagged the Zacks Consensus Estimate by 56.4%. The bottom line declined 44.3% from the year-ago quarter.
Behind the Headlines
Net premiums written were $17.9 billion in the quarter under review, up 18% from $6.8 billion in the year-ago period. Net premiums earned grew 20% year over year to $8.2 billion from $6.8 billion a year ago.
Net realized losses on securities were $572.2 million, wider than the year-ago loss of $9.7 million.
Combined ratio — percentage of premiums paid out as claims and expenses — deteriorated 110 basis points (bps) from the prior-year quarter’s level to 92.5%.
Full Year Highlights
Operating income of 52 cents per share in 2018 surged 70% year over year.
Operating revenues rose 21% year over year to $32.4 billion driven by 46% higher investment income, 20% rise in premiums earned, 25% rise in service revenues and 27% higher fees as well as other revenues.
Total expense increased 16.7% to $28.8 billion. This increase can be primarily attributed to 15.5% rise in loss and loss adjustment expenses, 21.1% increase in policy acquisition costs and 21% increase in other underwriting expenses.
Policies in Force Solid in December
In December, policies in force were impressive at the Personal Auto segment, having improved 14% from the year-ago month to 13.4 million. Special Lines inched up 0.4% from the prior-year month’s figure to 4.4 million.
In Progressive’s Personal Auto segment, Direct Auto grew 16% year over year to 7 million while Agency Auto improved 12% year over year to 6.4 million.
Progressive’s Commercial Auto segment rose 8% year over year to 0.7 million. The Property business had about 1.9 million policies in force in the reported month, up 32% year over year.
Financial Update
Progressive’s book value per share was $17.71 as of Dec 31, 2018, up 11% from $15.96 as of Dec 31, 2017.
Return-on-equity on a trailing 12-month basis was 23.81%, having expanded 210 bps year over year. Debt-to-total capital ratio deteriorated 260 bps year over year to 28.9% as of Dec 31, 2018.
Dividend Update
The company will pay annual variable dividend of $2.5140 per share on Feb 11, 2019.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Progressive has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Progressive has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Progressive (PGR) Up 10.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Progressive (PGR - Free Report) . Shares have added about 10.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Progressive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Progressive Q4 Earnings Miss Estimates, Premiums Rise Y/Y
Progressive Corporation’s fourth-quarter 2018 operating earnings per share of 44 cents lagged the Zacks Consensus Estimate by 56.4%. The bottom line declined 44.3% from the year-ago quarter.
Behind the Headlines
Net premiums written were $17.9 billion in the quarter under review, up 18% from $6.8 billion in the year-ago period. Net premiums earned grew 20% year over year to $8.2 billion from $6.8 billion a year ago.
Net realized losses on securities were $572.2 million, wider than the year-ago loss of $9.7 million.
Combined ratio — percentage of premiums paid out as claims and expenses — deteriorated 110 basis points (bps) from the prior-year quarter’s level to 92.5%.
Full Year Highlights
Operating income of 52 cents per share in 2018 surged 70% year over year.
Operating revenues rose 21% year over year to $32.4 billion driven by 46% higher investment income, 20% rise in premiums earned, 25% rise in service revenues and 27% higher fees as well as other revenues.
Total expense increased 16.7% to $28.8 billion. This increase can be primarily attributed to 15.5% rise in loss and loss adjustment expenses, 21.1% increase in policy acquisition costs and 21% increase in other underwriting expenses.
Policies in Force Solid in December
In December, policies in force were impressive at the Personal Auto segment, having improved 14% from the year-ago month to 13.4 million. Special Lines inched up 0.4% from the prior-year month’s figure to 4.4 million.
In Progressive’s Personal Auto segment, Direct Auto grew 16% year over year to 7 million while Agency Auto improved 12% year over year to 6.4 million.
Progressive’s Commercial Auto segment rose 8% year over year to 0.7 million. The Property business had about 1.9 million policies in force in the reported month, up 32% year over year.
Financial Update
Progressive’s book value per share was $17.71 as of Dec 31, 2018, up 11% from $15.96 as of Dec 31, 2017.
Return-on-equity on a trailing 12-month basis was 23.81%, having expanded 210 bps year over year. Debt-to-total capital ratio deteriorated 260 bps year over year to 28.9% as of Dec 31, 2018.
Dividend Update
The company will pay annual variable dividend of $2.5140 per share on Feb 11, 2019.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Progressive has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Progressive has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.