On Dec 21, 2015, we issued an updated research report on Progressive Corp. PGR – a leading independent agency writer of private passenger auto coverage. This Zacks Rank #3 (Hold) company continually strives to enhance and innovate its products, services and distribution capabilities.
Progressive Corp. aims to become a one-stop insurance shopping destination and is thus leaving no stone unturned to penetrate customer households through cross-selling auto policies and its Progressive Home Advantage program.
Progressive Corp. continues to gain from its expanded multi-product offering, reflected through improving premiums. Customer retention is also in focus and the company strives to improve its policy life expectancy (a measure for customer retention) through differentiated products and services.
Moreover, the company prudently deploys capital that in turn enhances its shareholders’ value. In addition to paying special dividend, over and above its regular dividend, the company also engages in share buyback activities. Progressive Corp. has also been consistently improving its leverage ratio.
However, the company’s exposure to catastrophe events that hurt its underwriting results and a competitive market scenario keep us on the sidelines.
With respect to quarterly performance, the company’s third-quarter earnings per share were 2.1% ahead of the Zacks Consensus Estimate. it is worth noting that this property and casualty insurer has delivered positive earnings surprises in three of the last four quarters, with an average beat of 12.15%.
The Zacks Consensus Estimate of earnings for 2015 and 2016 has decreased over the last 60 days. While the estimate moved south by a cent to $1.97 for 2015, the same inched up by a penny to $2.01 for 2016. The expected long-term earnings growth rate of the company is currently pegged at 9.5%.
Stocks to Consider
Some better-ranked property and casualty insurers are Cincinnati Financial Corp. CINF, RLI Corp. RLI and Hallmark Financial Services Inc. HALL. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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