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Progressive (PGR) to Report Q4 Earnings: Is a Beat in Store?

Zacks Equity Research

The Progressive Corporation PGR is slated to report fourth-quarter 2018 results on Jan 23 before market open. The company delivered positive surprise in each of the last four quarters.

Factors to Consider

Progressive’s premiums are likely to increase attributable to a compelling product portfolio, competitive rates and solid policies in force across all its business lines. Net investment income is also expected to increase given a favorable rate environment.

Moreover, higher service revenues and fees as well as other revenues are expected to fuel top-line improvement in the to-be reported quarter. The Zacks Consensus Estimate for revenues is pegged at $8.5 billion, up 19.3% year over year.

Its Personal auto business is likely to benefit from focus on marketing and competitive product offerings as well as strong market presence. Progressive is one of the leading auto insurers in the United States.

The Property business is expected to retain its momentum with cat events of significant magnitude inducing more policy writings. Price hikes and a compelling portfolio are expected to contribute to results.

Strong performing Vehicle and Property businesses are expected to benefit Personal and Commercial business lines.

Expenses are likely to rise on higher loss and loss-adjustment expenses, policy acquisition costs plus other underwriting expenses.

The fourth quarter was marked by Hurricane Michael and California wildfire.  Per reports from Florida Office of Insurance Regulation, Hurricane Michael is estimated to cause about $4.3 billion in insured losses. Given Progressive’s exposure in Florida, the insurer’s Property and Vehicle businesses are expected to suffer. Nonetheless, reinsurance coverage likely is likely to provide some cushion.

The Zacks Consensus Estimate is pegged at $1.01 per share, indicating 27.9% year-over-year growth.

The Progressive Corporation Price and EPS Surprise

The Progressive Corporation Price and EPS Surprise | The Progressive Corporation Quote

What the Quantitative Model Says

Our proven model shows that Progressive is likely to beat estimates in the to-be reported quarter. This is because it has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Progressive has an Earnings ESP of +1.57% as the Most Accurate Estimate of $1.02 is pegged above the Zacks Consensus Estimate of $1.01. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Progressive sports a Zacks Rank of 1, which increases the predictive power of ESP.

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

Other Stocks to Consider

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

Brown & Brown, Inc. BRO has an Earnings ESP of +5.38% and a Zacks Rank #2. The company is slated to announce fourth-quarter earnings on Jan 28. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chubb Limited CB is set to report fourth-quarter earnings on Feb 2. The stock has an Earnings ESP of +1.65% and a Zacks Rank of 3.

Radian Group Inc. RDN has an Earnings ESP of +3.03% and a Zacks Rank of 1. The company is anticipated to release fourth-quarter earnings on Feb 7.

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