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Progressive (PGR) Q2 Earnings Miss Estimates, Improve Y/Y

Progressive Corp.’s PGR second-quarter 2017 operating earnings per share of 59 cents missed the Zacks Consensus Estimate by nearly 1.7%. However, earnings more than doubled from 29 cents, earned in the year ago quarter.

Including net realized gains, the net income per share was 63 cents, up about 93% year over year.

Behind the Headlines

Progressive recorded net premiums written of $6.7 billion in the quarter under review, up 14% from $5.9 billion in the year-ago quarter. Also net premiums earned, grew 14% year over year from $5.6 billion to $6.3 billion.

Net realized gains on securities were $32.1 million, down 1% year over year. Combined ratio − the percentage of premiums paid out as claims and expenses − improved 360 basis points (bps) from the prior-year quarter to 93.2%.

Progressive Corporation (The) Price, Consensus and EPS Surprise

Progressive Corporation (The) Price, Consensus and EPS Surprise | Progressive Corporation (The) Quote

Numbers in June

Operating revenues improved 13% year over year to $2.1 billion in the quarter. The top line growth was driven by a 13% increase in premiums, 8% higher investment income, 7% rise in fees and other revenues, plus 36% jump in service revenues.

Total expense increased 12.4% to $1.9 billion. The rise in expenses can be primarily attributed to 12.9% higher losses and loss adjustment expenses, 12.2% increase in policy acquisition costs and 9% higher other underwriting expenses.

In Jun 2017, policies in force were impressive with the Personal Auto segment, improving 8% from Jun 2016 to 11 million. Special Lines inched up 2% from the prior-year month to 4.4 million.

In Progressive’s Personal Auto segment, both Direct Auto and Agency Auto grew 8% year over year to 5.3 million and 5.7 million, respectively.

Progressive’s Commercial Auto segment grew 4% year over year to 0.6 million. The Property business had about 1.3 million policies in force in the reported month, up 11% year over year.

Progressive’s book value per share was $15.48 as of Jun 30, 2017, up 14.9% from $13.47 as of Jun 30, 2016.

Return on equity on a trailing 12-month basis was 17.4%, up 410 bps from 14.8% in Jun 2016. Debt-to-total capital ratio deteriorated 190 bps year over year to 27.3% as of Jun 30, 2017.

Zacks Rank and Performance of Another Insurer

Progressive carries a Zacks Rank #2 (Buy). You can see https://www.zacks.com/stocks/buy-list/?ADID=zp_1link&ICI... _1link">the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Brown & Brown, Inc. BRO reported second-quarter 2017 earnings of 49 cents per share that beat the Zacks Consensus Estimate by 4.3%.

Stocks to Consider

Investors interested in the insurance industry can also consider Everest Re Group, Ltd. RE and Reinsurance Group of America, Inc. RGA.

Everest Re Group offers reinsurance and insurance products. The company is set to release its second-quarter results on Jul 24.

Reinsurance Group is primarily engaged in life reinsurance and international life and disability insurance on a direct and reinsurance basis. The company is set to release its second-quarter results on Jul 27.

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Brown & Brown, Inc. (BRO): Free Stock Analysis Report
 
Reinsurance Group of America, Incorporated (RGA): Free Stock Analysis Report
 
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Progressive Corporation (The) (PGR): Free Stock Analysis Report
 
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