Progressive (PGR) Q1 Earnings Beat Unlikely: Stock at Risk?

Property and casualty insurer Progressive Corp. PGR is scheduled to report first-quarter 2016 results before the opening bell on Apr 14.

In the last quarter, this insurer delivered a 12.5% positive earnings surprise. The average beat for the trailing four quarters is 5.4%. Will Progressive deliver a positive earnings surprise this quarter as well?

Factors Influencing This Past Quarter

Progressive's first-quarter performance is likely to have benefited from competitive pricing and an expanded multi-product offering. These in turn have driven the retention ratio.

Improved premiums continued to fuel the top line as is already evident from its monthly results. Policies in force are expected to have remained healthy too for the to-be-reported quarter.

However, expenses are likely to have increased. January and February results showed an increase in expenses and combined ratio (a measure of insurer's underwriting profitability).

Nonetheless, continued buyback should be accretive to the company's bottom line. But will it be able to pull off an earnings beat?

Earnings Whispers

Our proven model does not conclusively show that Progressive will likely beat the Zacks Consensus Estimate in the fourth quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. But this is not the case here as elaborated below.

Zacks ESP: Progressive has 0.00% Earnings ESP. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 51 cents per share.

Zacks Rank: Progressive has a Zacks Rank #3. Though this increases the predictive power of the ESP, the company's 0.00% ESP makes our surprise prediction difficult.

Stocks to Consider

Here are some companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:  

RenaissanceRe Holdings Ltd. RNR has an Earnings ESP of +5.84% and a Zacks Rank #3. The company is scheduled to release first-quarter earnings results on Apr 2.

Aspen Insurance Holdings Ltd. AHL, Earnings ESP of +9.76% and a Zacks Rank #2. The company is scheduled to report first-quarter earnings results on Apr 21.

The Travelers Companies, Inc. TRV has an Earnings ESP of +1.32% and a Zacks Rank #2. The company is scheduled to release first-quarter earnings results on Apr 21.
 

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