Yahoo Finance Should You Retain Progressive (PGR) Stock in Your Portfolio?
The Progressive Corporation PGR has been gaining momentum over the past many quarters on the back of a compelling portfolio, leadership position, strength in Vehicle and Property businesses, healthy policies in force, retention and a solid capital position.
Growth Projections
The Zacks Consensus Estimate for Progressive’s 2024 earnings per share indicates a year-over-year increase of 85.6%. The consensus estimate for revenues is pegged at $73.09 billion, implying a year-over-year improvement of 18.3%.
The consensus estimate for 2025 earnings per share and revenues indicates a year-over-year increase of 7.7% and 13.4%, respectively, from the corresponding 2024 estimates.
The expected long-term earnings growth rate is 22.9%, outperforming the industry average of 10.2%.
Northbound Estimate Revision
The Zacks Consensus Estimate for PGR’s 2022 and 2023 earnings has moved 0.7% and 2.5% north in the past 60 days. This should instill investors' confidence in the stock.
Earnings Surprise History
Progressive has a decent surprise history, beating estimates in three of the last four quarters while missing in one, the average earnings surprise being 4.99%.
Zacks Rank & Price Performance
Progressive currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 58.1% compared with the industry’s growth of 24.2%.
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Style Score
PGR is well-poised for progress, as is evident from its favorable VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Return on Equity
Progressive’s return on equity for the trailing 12 months is 29.4%, better than the industry average of 7.8%. This reflects efficiency in utilizing shareholders’ funds.
Business Tailwinds
Progressive is one of the country’s largest auto insurance groups, the largest seller of motorcycle and boat policies, the market leader in commercial auto insurance, and one of the top 15 homeowners carriers based on premiums written.
A compelling product portfolio, its leadership position, healthy policies in force, better pricing and a solid retention ratio should help PGR generate higher premiums. Its premiums written increased 11% in the last 10 years and surpassed the industry average of 4%.
Policy life expectancy (PLE), a measure of customer retention, has improved in the last few years across all business lines. Strategic initiatives to provide consumers with a distinctive new auto insurance option along with competitive pricing should help Progressive deliver solid PLE. The insurer has been focusing on cross-selling homes with auto insurance.
PGR’s combined ratio averaged less than 93% over the last 10 years and compared favorably with the industry average of more than 100%. Prudent underwriting coupled with favorable reserve development should continue to support Progressive in delivering a better combined ratio.
PGR strategically maintains an investment portfolio with investments skewed toward U. S. Treasuries. A solid capital position helps it navigate a volatile market as well as invest in growth opportunities.
Progressive has an impressive history of distributing wealth to shareholders via dividends and share buybacks. It has been paying dividends uninterruptedly since 1971, yielding 0.3%, and has a 25 million share buyback program under its authorization. Notably, its free cash flow conversion has been more than 100% in the last many quarters, reflecting its solid earnings.
Progressive has an impressive Growth Score of A. This style score helps analyze the growth prospects of a company.
However, PGR has been experiencing increasing expenses primarily due to higher losses and loss adjustment expenses, policy acquisition costs, service expenses and interest expenses. The insurer should strive to achieve revenue growth higher than the rate of increase in expenses. Otherwise, expenses will tend to weigh on operating margin expansion.
Stocks to Consider
Some better-ranked stocks from the insurance sector are Palomar Holdings, Inc. PLMR, NMI Holdings Inc. NMIH, and RLI Corp. RLI. While Palomar sports a Zacks Rank #1 (Strong Buy), NMI Holdings and RLI carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Palomar’s earnings surpassed estimates in each of the last four quarters, the average surprise being 15.1%. In the past year, shares of PLMR have climbed 29.8%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 revenues implies year-over-year growth of 26% and 18.1%, respectively.
NMI Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 8.60%. In the past year, shares of NMIH have jumped 31.1%.
The Zacks Consensus Estimate for NMIH’s 2024 and 2025 revenues implies year-over-year growth of 10.6% and 7.6%, respectively.
RLI’s earnings surpassed estimates in three of the last four quarters and missed in one, the average surprise being 132.39%. In the past year, shares of RLI have gained 2.9%.
The Zacks Consensus Estimate for RLI’s 2024 and 2025 revenues implies year-over-year growth of 18.4% and 3.8%, respectively.
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RLI Corp. (RLI) : Free Stock Analysis Report
The Progressive Corporation (PGR) : Free Stock Analysis Report
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