Can Progressive (PGR) Sustain Growth on Core Strengths?
On Sep 22, 2015, we issued an updated research report on Progressive Corp. PGR.
Progressive is considered a leader in product, service and distribution innovation, especially in personal auto. The company has also been consistently penetrating customer households through cross-selling auto policies and the Progressive Home Advantage (PHA) program.
Under PHA, the company bundles its auto product with property insurance provided by unaffiliated insurance carriers. To that end, the company bought a majority stake in ARX Holding Corp. As of Jun 30, 2015, PHA was available to Direct customers across the nation and to Agency customers in 29 states (three states added in the first half of 2015) as well as to both Direct and Agency customers in the District of Columbia. PHA was already available to Agency customers in Florida and was offered to Direct customers in the statein 2014.
Progressive continues to gain from its expanded multi-product offering, reflected through improving premiums. The company also remains focused on customer retention and thus strives to improve its policy life expectancy (PLE), a measure for customer retention through differentiated products and services.
Riding on the strength of its operational performance, the company also engages in shareholder friendly moves. While Progressive pays annual dividend regularly, it has 16 million remaining under its share buyback authorization.
However, the company’s exposure to catastrophe events thathurt its underwriting results and a competitive market keep us on the sidelines.
With respect to earnings results, the company’s second-quarter earnings per share were in line with the Zacks Consensus Estimate. The Zacks Rank #2 (Buy) property and casualty insurer delivered earnings surprises in the three of last four quarters, with an average beat of 13.4%.
The respective Zacks Consensus Estimate for 2015 and 2016 has also increasedin the last 60 days. While the same moved north by a couple of cents to $1.97 for 2015, it inched up by a penny to $1.99 for 2016. The expected long-term earnings growth rate is currently pegged at 9.5%.
Other Stocks to Consider
Investors interested in the property and casualty industry can take a look at Cincinnati Financial Corp. CINF, First American Financial Corporation FAF and The Travelers Companies, Inc. TRV. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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TRAVELERS COS (TRV): Free Stock Analysis Report
CINCINNATI FINL (CINF): Free Stock Analysis Report
PROGRESSIVE COR (PGR): Free Stock Analysis Report
FIRST AMER FINL (FAF): Free Stock Analysis Report
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