Progressive (PGR) Hits 52-Week High On Impressive Strategies

Shares of The Progressive Corp. (NYSE:PGR) have been on an uptrend (gaining 10.6%) over the last few weeks. In fact, the share price hit a new 52-week high of $41.74 on May 19. About 4.8 million shares exchanged hands in the last trading session and the stock finally closed at $41.10. Estimates have also moved north over the last 60 days.

Why the Stock Should Be in Your Portfolio

Progressive is a premium insurance provider in terms of product, service and distribution innovation, especially personal auto. It is also a leader in underwriting technology and the application of quantitative analytics in pricing and risk selection. Progressive has also been striving to further penetrate customer households through the cross-sell of auto policies. The insurer’s net premiums written increased at a five-year CAGR of 9.2%. Progressive’s competitive rates in all its markets and expanded multi-product offering bode well for long-term growth.

The company has also been deploying capital effectively in shareholder-friendly moves like dividends, special dividends and share repurchases. Given its financial strength, we expect more shares to be repurchased going forward.

Last week, the company reported improved April earnings on higher revenues.

Valuation is also attractive at present as the stock is currently trading at a forward P/E of 17.4x, a 36% discount to the industry average of 27.1x. Though the price to book valuation multiple is expensive, Progressive has a trailing 12-month return on equity (ROE) of 14.0% compared with the industry average of 6.5%.

Shares of this Zacks Rank #3 (Hold) insurer gained 15.77% year to date, outperforming the Zacks categorized Property, Casualty and Title Insurance industry’s increase of 0.68%. Investors should note that Progressive has returned more than S&P 500.

Also, this Zacks Rank #3 (Hold) insurer delivered positive surprises in two of the last four quarters with an average beat of 4.95%. The long-term expected earnings growth is pegged at 9%.

With respect to estimate revisions, the Zacks Consensus Estimate moved north by 6.3% to $2.36 for 2017 and by 5.8% to $2.57 for 2018 over the last 60 days. Progressive also carries a VGM Score of A. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics.

Stocks to Consider

Some better-ranked property and casualty (P&C) insurers are American Financial Group, Inc. (NYSE:AFG) , CNA Financial Corporation (NYSE:CNA) and Fidelity National Financial, Inc. (NYSE:FNF) .

American Financial Group primarily engages in P&C insurance with focus on specialized commercial products for businesses. The company had a positive earnings surprise of 23.36% in the last reported quarter. The company flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CNA Financial offers commercial P&C insurance products, primarily in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 12.45%. The company carries a Zacks Rank #2 (Buy).

Fidelity National provides title insurance, and technology and transaction services to the real estate and mortgage industries in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 8.47%. The company carries a Zacks Rank #2.

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