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Reasons to Hold Progressive (PGR) Stock in One's Portfolio

The Progressive Corporation PGR is poised for growth given its compelling product portfolio, leadership position and strength in both Vehicle and Property businesses, healthy policies in force and retention and favorable growth estimates. These make Progressive stock worth retaining in one’s portfolio.

Progressive has a decent track record of beating earnings estimates. It beat the Zacks Consensus Estimate in two of the last four reported quarters while missing in two.

The Zacks Consensus Estimate for 2022 has moved up 2 cents in the past seven days, reflecting analyst optimism.

Zacks Rank & Price Performance

Progressive currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 4.5%, compared with the industry's increase of 13.4%.

Zacks Investment Research
Zacks Investment Research

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Growth Projections

The Zacks Consensus Estimate for Progressive’s 2022 earnings is pegged at $4.73 per share, indicating a 32.6% increase from the year-ago reported figure on 12.4% higher revenues of $52 billion.

The expected long-term earnings growth rate is pegged at 6%.

Return on Equity

Progressive’s trailing 12-month ROE of 17.6% is better than the industry average of 5.6%.

ROE is a profitability measure to identify how efficiently the company is utilizing its shareholders' fund.

Style Score

Progressive has a favorable VGM Score of A. This style score rates stocks on their combined weighted styles, helping to identify those with the most attractive value, best growth, and momentum.

Business Tailwinds

Boasting one of the country’s largest auto insurance groups, Progressive is 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. Net premium written grew 11% in the last 10 years, outperforming the industry average of 4%. PGR should be able to retain the momentum given its compelling product portfolio and competitive rates, solid policies in force, retention ratio, and leadership position.

Policy life expectancy (PLE), a measure for customer retention, has been exhibiting improvement over the last few years across all its business lines. Several initiatives are underway that aim at providing consumers with a distinctive new auto insurance option. This should help Progressive maintain solid PLE.

Progressive has been consistently putting in efforts to further penetrate customer households through cross-selling auto policies and Progressive Home Advantage. Growth momentum at Progressive’s Robinson (bundled home and auto) continued with policies in force growth of about 30%.

Over the past 10 years (2010-2020), the company’s combined ratio has averaged less than 93%, which compares favorably with the industry average combined ratio of more than 100%.

Progressive has been continually paying dividends since 1971 as well as buying back shares.

Stocks to Consider

Some better-ranked stocks from the same space include Hallmark Financial Services HALL, Kinsale Capital Group KNSL and Fidelity National Financial FNF, each sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Hallmark Financial’s 2022 earnings indicates a 30% year-over-year increase. Hallmark Financial delivered a four-quarter average earnings surprise of 53.62%.

The Zacks Consensus Estimate for 2022 earnings of Kinsale indicates a 17% year-over-year increase. Kinsale delivered a four-quarter average earnings surprise of 37.63%.

The Zacks Consensus Estimate for Fidelity National’s 2022 earnings has moved up 4.6% in the past 30 days. Fidelity National delivered a four-quarter average earnings surprise of 38.18%.

Shares of HALL, KNSL and FNF have surged 25%, 15.8% and 32%, respectively, year to date.

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The Progressive Corporation (PGR) : Free Stock Analysis Report

Fidelity National Financial, Inc. (FNF) : Free Stock Analysis Report

Hallmark Financial Services, Inc. (HALL) : Free Stock Analysis Report

Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report

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