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Progressive (PGR) to Report Q2 Earnings: What's in Store?

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The Progressive Corporation PGR is slated to report second-quarter 2020 results on Jul 15, before market open. The company delivered a negative surprise of 1.77% in the first quarter of 2020.

Factors to Consider    

Progressive’s second-quarter results are expected to reflect the impacts of the COVID-19 pandemic. Total auto new business applications are likely to have declined in the second quarter.

However, premiums are likely to have benefited from solid policies in force, higher retention, competitive rates and compelling product portfolio.

Policies in force are likely to have improved, benefiting from focus on segmentation and risk selection. The Zacks Consensus Estimate for personal lines policies in force is pegged at 19,991 million, indicating an increase of 6.2% from the year-ago reported quarter.

Improved premiums, rise in investment income, increase in service revenues and fees as well as other revenues are likely to have fueled revenues. The Zacks Consensus Estimate for second-quarter revenues stands at $9.9 billion, suggesting 7.3% growth from the year-earlier quarter's reported figure.

Progressive is one of the leading auto insurers in the United States, boasting one of the largest auto insurance groups. It is also the largest seller of motorcycle policies, the market leader in commercial auto insurance and one of the top 15 homeowners carriers based on premiums written.  Its personal auto business is likely to have benefited from its focus on marketing and competitive product offerings as well as strong market presence.

However, the company estimates slowing home sales to have put second-quarter new Property insurance sales under pressure, though a benign catastrophe environment and better pricing might have aided underwriting profit.

Solid performing Vehicle and Property businesses are expected to have supported Personal and Commercial business lines.

Expenses are likely to have risen on higher loss and loss-adjustment expenses, and policy acquisition costs plus other underwriting expenses. Nonetheless, loss and loss adjustment expenses ratio is likely to have improved attributable to decrease in auto accident frequency given stay at home due to the pandemic. The consensus estimate for Personal Line loss and loss adjustment expenses ratio is pegged at 52.

The Zacks Consensus Estimate for earnings is pegged at $1.74, indicating 4.8% increase from the year-ago quarter's reported number.

The Progressive Corporation Price and EPS Surprise

The Progressive Corporation Price and EPS Surprise
The Progressive Corporation Price and EPS Surprise

The Progressive Corporation price-eps-surprise | The Progressive Corporation Quote

What the Zacks Model Says

Our proven shows does not conclusively predict an earnings beat for Progressive this time around. This is because the stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This is not the case as you can see below.

Earnings ESP: Progressive has an Earnings ESP of -1.77%. This is because the Most Accurate Estimate of $1.71 is pegged lower than the Zacks Consensus Estimate of $1.74. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Progressive currently carries a Zacks Rank of 3.

Key Picks

Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

The Travelers Companies TRV has an Earnings ESP of +10.63% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Everest Re Group RE has an Earnings ESP of +85.36% and a Zacks Rank #3.

American Financial Group AFG has an Earnings ESP of +21.45% and a Zacks Rank of 3.

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