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PGR STOCK WRITE UP


PGR (PROGRESSIVE CORP)

  • P/E: 21.7
  • GAAP DILUTED YEAR-OVER-YEAR EPS GROWTH LAST QUARTER: $.25
  • SECTOR: FINANCE
  • ASSETS-LIABILITIES: 1.35
  • DIVIDEND: 1.53%

Progressive is an insurance company founded in 1937. Up 25% YTD, PGR will report earnings in mid July, looking to extend the streak. PGR dispenses its 1.53% dividend in one large yearly chunk.
Progressive managed to increase underwriting margin by approximately 60% while increasing total revenue by 13% on a year-over-year basis. While the company claims to have more assets than liabilities, it has less than 8% of its debt in cash. However, because Progressive makes money by investing its revenue from premiums, it would lose profit capability by having the majority of its funds in cash. The revenue earned from premiums is nearly 60 times the company's investment income, which is concentrated in company debt securities and government obligations. While EPS has beat Wall Street expectations 6 out of the last 9 quarters, revenue has missed expectations all but twice.
Tricia Griffith has been the company's CEO for roughly one year. She started with the company as a claims representative in 1988. According to repairerdrivennews, PGR, the 4th largest insurance provider, grew at a faster rate than #3 Allstate last year. With most of its investments in government securities, the company will also benefit from recently increased rates. Progressive's snapshot program has met some criticism, as has the company's policy of outsourcing home and renter's insurance to third parties.
PGR trades at a premium to ALL with a lower dividend, and Geico is not comparable because it is a subsidiary of Berkshire Hathaway. It is more expensive than the average insurance stock, and has a comparable revenue growth rate. In 2017, it has grown 5% more than ALL, its closest competitor, and will look to report earnings in 7/2017 that continue to propel expectations higher.









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