Progressive Slips Despite A Five-Fold Jump In February Earnings

Progressive Corporation reported a more than five-fold jump in earnings for Feb. However, shares of the insurance company closed 2.4% lower on Wednesday as a sequential decline in profit didn’t sit well with the investors.

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Progressive’s (PGR) Feb. earnings per share surged about 444% to $0.60 year-on-year. However, it decreased by 36.8% from $0.95 in Jan.

Net premiums written climbed 13% to $3.9 billion year-over-year, while net premiums earned increased 10% to $3.2 billion. Its combined ratio (percentage of premiums paid out as claims and expenses) increased 110 basis points to 91.4 in Feb. from 90.3 in the prior-year period. (See Progressive stock analysis on TipRanks)

Progressive’s overall policies-in-force increased 10% in Feb. to 25.2 million from 22.8 million in the year-ago period. The company recorded year-over-year growth across all its policy lines. Its policies-in-force for Personal Lines, Commercial Lines and Property Business increased 10%, 10% and 13%, respectively.

Following the announcement, Wells Fargo analyst Elyse Greenspan reiterated a Sell rating and price target of $90 (1.2% downside potential) on the stock. In a note to investors, Greenspan wrote, “We are seeing rate declines in the personal auto sector and the level of rate should slow as the industry factors in the Covid-19 favorable frequency levels. Further, as miles driven rebound from Covid-19 lows the favorable frequency trends should subside even further from here.”

Overall, consensus among analysts is a Hold based on 2 Holds, 2 Buys and 3 Sells. The average analyst price target of $96 implies upside potential of about 5.4% from current levels. Shares have gained around 24.8% over the past year.