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Can Progressive Corp (PGR) Q1 Earnings Pull a Surprise? - Analyst Blog

Zacks Equity Research

Progressive Corp. PGR is set to report first-quarter 2015 results on Apr 15 before the market opens. Last quarter, the company posted a 39.5% surprise. Let’s see how things are shaping up for this announcement.

Factors Influencing This Past Quarter

Given Progressive’s expanded multi-product offering, policies in force and policy life expectancy should exhibit improvement.

Progressive undertook several initiatives aimed at providing consumers with distinctive new auto insurance options. The fastest personal auto growth area continues to be in Internet-produced business. Also, Progressive’s Snapshot program is expected to drive growth.

Efforts by the company to further penetrate customer households through cross-selling auto policies are also likely to pay off. Recently, the company acquired a majority stake in ARX Holding to enhance its offering in Progressive Home Advantage – a combination of home and auto insurance.

However, continued growth at Commercial Auto businesses remains challenging due to heightened competition.

Earnings Whispers?

Our proven model does not conclusively show that Progressive Corp. is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Progressive Corp. has -2.33% Earnings ESP. This is because the Most Accurate estimate stands at 42 cents while the Zacks Consensus Estimate stands at 43 cents.

Zacks Rank: Progressive Corp. carries a Zacks Rank #3 (Hold). Though this increases the predictive power, the company’s ESP of -2.33% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:  

AXIS Capital Holdings Limited AXS Earnings ESP of +11.76% and a Zacks Rank #1 (Strong Buy).

PartnerRe Ltd. PRE, Earnings ESP of +9.09% and a Zacks Rank #3.

Everest Re Group Ltd. RE, Earnings ESP of +8.49% and a Zacks Rank #3.


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