Progressive (PGR) Hits 52-Week High On Impressive Strategies
Zacks Investment Research | May 22, 2017 08:45AM ET
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 .
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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