Progressive Q4 Earnings: Can PGR Hit Its $1.12 EPS Target?

in EARNINGS/INVESTING IDEAS by

The Progressive Corporation (NYSE:PGR) is scheduled to report Q4 earnings results on January 29, 2020.

The company is expected to report earnings of $1.12/share on revenue of $8.889 billion. The consensus earnings per share (EPS) of $1.12/share is based on a poll of 18 analysts and represents a decline of -10.8% over the same quarter last year when the company reported earnings of $1.25/share.

The revenue forecast of $8.889 billion based on a poll of 7 analysts implies a year-over-year (YoY) growth of 11.9%. Last year the company reported $7.942 billion in revenue for the quarter.

Expected to report EPS decline of -$0.13/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $8,889.00 $7,941.80 11.9%
EPS $1.12 $1.25 -10.8%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from Progressive for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $1.30 $1.33 2.2% Beat
Q2, 2019 $1.44 $1.43 -0.7% Missed
Q1, 2019 $1.35 $1.35 0.0% Beat
Q4, 2018 $1.02 $1.25 23.2% Beat
Q3, 2018 $1.13 $1.33 17.1% Beat
Q2, 2018 $1.12 $1.16 3.3% Beat
Q1, 2018 $1.20 $1.29 7.7% Beat
Q4, 2017 $0.77 $0.80 3.9% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending September 30, 2019, the stock price reacted by falling by -4.7%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-16 $74.97 $71.47 -4.7% Decline
2019-07-17 $84.12 $81.19 -3.5% Decline
2019-04-16 $72.26 $76.16 5.4% Increase
2019-01-23 $63.29 $65.24 3.1% Increase

Fundamentals And Technical Analysis

Progressive is currently trading at $76.27/share, down 0.0% for the day. The company is trading at approximately 89.8% of its 52-week high of $84.96/share. The company’s stock price is up 6.7% since the last earnings report and up 2.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 63.34 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

NYSE:PGR Stock Price Chart Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 14.1x and a forward P/E multiple of 14.6x.

Progressive’s current share price also implies a price-to-book (P/B) multiple of 3.3x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date September 30, 2019
Stock Price (Current) $76.27
P/E Ratio 14.1x
P/E Ratio (Fwd) 14.6x
PEG Ratio 17.8
Total Debt to Capital (%) 9.2%
Levered Free Cash Flow $5.834 billion
Enterprise Value / EBITDA 11.0x

Source: Finbox

Company Profile: The Progressive Corporation

The Progressive Corporation is a large-cap stock with a market capitalization of $44.605 billion and a total enterprise value of $49.886 billion. The company operates in the Financial sector and the Insurance industry.

The Progressive Corporation, through its subsidiaries, provides personal and commercial auto insurance, residential property insurance, and other specialty property-casualty insurance and related services primarily in the United States.

Its Personal Lines segment writes insurance for personal autos, and recreational and other vehicles. This segment’s products include personal auto insurance; and special lines products, including insurance for motorcycles, ATVs, RVs, watercrafts, and snowmobiles.

The company’s Commercial Lines segment provides primary liability, physical damage, and other auto-related insurance for autos, vans, pick-up trucks, and dump trucks used by small businesses; tractors, trailers, and straight trucks primarily used by regional general freight and expeditor-type businesses, and non-fleet long-haul operators; dump trucks, log trucks, and garbage trucks used by dirt, sand and gravel, logging, and coal-type businesses; tow trucks and wreckers used in towing services and gas/service station businesses; and non-fleet taxis, black-car services, and airport taxis.

Its Property segment provides residential property insurance for homes, condos, manufactured homes, and renters, as well as offers personal umbrella insurance, and primary and excess flood insurance. The company also offers policy issuance and claims adjusting services; home, condominium, renters, and other insurance; and general liability and business owner’s policies, and workers’ compensation insurance.

In addition, it offers reinsurance services. The Progressive Corporation sells its products and services through independent insurance agencies, as well as directly on the Internet, and mobile devices, and over the phone. The company was founded in 1937 and is headquartered in Mayfield, Ohio.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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