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Progressive (PGR) Stock Up 20% YTD: More Room for Growth?

Zacks Equity Research
·4-min read

Shares of The Progressive Corporation PGR have rallied 19.5% year to date against the industry’s decrease of 5.2%. The Finance sector and the Zacks S&P 500 composite have declined 14.6% and 17.7%, respectively in the same time frame. With a market capitalization of $71.7 billion, the average volume of shares traded in the last three months was 2.7 million.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

PGR has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum.

A compelling product portfolio, leadership position, strength in both Vehicle and Property businesses, healthy policies in force and retention continue to drive PGR. The Zacks Consensus Estimate for 2022 and 2023 earnings has moved north by 2 cents each in the past seven days, reflecting analysts’ optimism.  

Return on equity of this Zacks Rank #3 (Hold) insurer in the trailing 12 months was 12.8%, better than the industry average of 5.7%.

Can PGR Retain the Momentum?

The Zacks Consensus Estimate for 2022 earnings is pegged at $4.71, indicating an increase of 6.8% on 10.7% higher revenues of $51.1 billion. The consensus estimate for 2023 earnings is pegged at 6.53, indicating an increase of 38.6% on 10.9% higher revenues of $56.7 billion.

The long-term earnings growth rate is currently pegged at 17.4%, better than the industry average of 11.7%.

Progressive is the largest seller of motorcycle policies, the market leader in commercial auto insurance, and one of the top 15 homeowner carriers, based on premiums written. PGR’s net premiums written grew 11% in the last 10 years and surpassed the industry average of 4%.  

Policy life expectancy (“PLE”), a measure of customer retention, has been exhibiting improvement over the last few years across all its business lines. Strategic initiatives aimed at providing consumers with a distinctive new auto insurance option 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. The momentum at Progressive’s Robinson (bundled home and auto) continued with policies-in-force growth of about 30%.

PGR’s combined ratio averaged less than 93% in a decade, reflecting superior underwriting discipline and compared favorably with the industry average combined ratio of more than 100%.

Banking on operational excellence, Progressive has been paying dividends uninterruptedly since 1971. PGR also has a 25 million share buyback program under its authorization.

Stocks to Consider

Some better-ranked stocks from the property and casualty insurance industry are Arch Capital Group Ltd. ACGL, American Financial Group, Inc. AFG and ProAssurance Corporation PRA, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of Arch Capital surpassed earnings estimates in three of the last four quarters and missed in one, the average being 33.64%. In the past year, the insurer has rallied 15.4%.

The Zacks Consensus Estimate for Arch Capital’s 2022 and 2023 earnings has moved 5.7% and 4.9% north, respectively, in the past 30 days.

American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 37.09%. In the past year, American Financial has lost 7.9%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 3.1% and 3.3% north, respectively, in the past 30 days.

The bottom line of ProAssurance surpassed earnings estimates in three of the last four quarters and missed in one, the average being 150.9%. In the past year, the insurer has lost 15.6%.

The Zacks Consensus Estimate for ProAssurance’s 2022 and 2023 earnings has moved 25.9% and 13.9% north, respectively, in the past 30 days.


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ProAssurance Corporation (PRA) : Free Stock Analysis Report
 
The Progressive Corporation (PGR) : Free Stock Analysis Report
 
American Financial Group, Inc. (AFG) : Free Stock Analysis Report
 
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
 
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Zacks Investment Research