Progressive Set To Grow On Core Strength, Costs A Drag

On Jul 12, 2016, we issued an updated research report on Progressive Corp. (NYSE:PGR) .

Progressive is an ace player in product, service and distribution innovation, especially in personal auto. The insurer enjoys competitive across all its markets thanks to its diversified suite of product and services. This in turn has been fueling premiums and aiding the company to record a stable retention ratio.

The company has already been cross-selling auto policies and Progressive Home Advantage. While the company expects to reach the still under-penetrated market segment of bundled customers through its acquisition of a majority stake in ARX Holding Corp., it is also diligently working toward its Platinum offering, which is a combined offering of home and auto insurance in its Agency channel.

Progressive remains focused on enhancing shareholder value via share buyback and dividend payments. The company has 10.4 million shares remaining under the current authorization. Share buybacks lower the share count and boost the bottom line.

However, being a property casualty insurer its underwriting results and earnings are exposed to volatility. Progressive's growth could be challenged by heightened competition. The company has also been witnessing escalating expenses.

With respect to earnings trend, the company delivered a positive surprise in only one of the last four quarters, with an average miss of 0.36%. The Zacks Consensus Estimate has also been witnessing downward revisions over the last couple of months.

Progressive is scheduled to release second-quarter earnings on Jul 14. The Zacks Consensus Estimate for the second quarter is currently pegged at 33 cents, translating into a year-over-year decrease of 39.5%. However, our proven model cannot conclusively state if the bottom line will beat estimates because despite having a favorable Zacks Rank #3 (Hold), the company’s Earnings ESP of 0.00% makes prediction difficult.

Stocks to Consider

Some better-ranked life insurers include Alleghany Corporation (NYSE:Y) , Third Point Reinsurance Ltd. (NYSE:TPRE) and MS&AD Insurance Group Holdings, Inc. (NYSE:Y) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

PROGRESSIVE COR (PGR): Free Stock Analysis Report

ALLEGHANY CORP (Y): Free Stock Analysis Report

THIRD PT REINSR (TPRE): Free Stock Analysis Report

MS&AD INSURANCE (MSADY): Free Stock Analysis Report

Original post

Zacks Investment Research