Earnings Review: The Progressive Corporation (PGR)

While the world seems to be in the midst of the perpetual political crisis – the federal government shutdown, Brexit and the “yellow vest” protests in France – Wall Street is focusing on what really counts: earnings.

According to FactSet, the S&P 500 should post average annual earnings growth of 10.6% and average annual sales growth of 6% for the fourth quarter. Only 11% of S&P 500 companies have reported so far, but of these companies, 76% have posted a positive earnings surprise and 56% have posted a positive sales surprise.

One well-known insurance company released mixed results on Wednesday morning, posting an earnings miss and a revenue surprise. Wall Street zeroed in on the better-than-expected sales, so the stock actually ended the day slightly higher.

The Progressive Corporation’s (PGR) reported earnings of $0.44 per share, down from the $0.79 per share reported in the same quarter a year ago. These bottom line results were also well below the estimated $1.01. This represents an earnings miss of -56.4%.

However, revenue was strong, increasing 16.80% from a year ago to $7.94 billion. It was also well above the analyst consensus for $7.86 billion. Net premiums written rose 20% to $2.36 billion from a year ago. Net premiums earned increased 19% year-over-year to $2.55 billion.

All in all, the report showed that the company’s longer-term trend is intact. The net premiums are important here, and they were solid.

I should also add that PGR remains a strong divided growth stock. Its next dividend of $1.12 per share will be paid on February 9 to all shareholders of record on Friday, February 1. Then on February 11, a dividend of $2.51 per share will be paid out. Shareholders of record on February 2 will receive it. At current prices, the stock has a 3.9% dividend yield. I continue to like PGR here.

Sincerely,

Louis Navellier

Louis Navellier

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