NEW YORK (TheStreet) -- Progressive Corp. (PGR - Get Report) shares are down -0.4% to $25.07 in pre-market trading on Thursday following the release of the company's second quarter earnings results which saw a year over year quarterly profit decrease of 9.6%.
The car insurance company reported net income of $293.4 million, or 49 cents per diluted share, ahead of analysts consensus estimates by one cent, but five cents below its results the previous year.
TheStreet Ratings team rates PROGRESSIVE CORP-OHIO as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate PROGRESSIVE CORP-OHIO (PGR) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.8%. Since the same quarter one year prior, revenues slightly increased by 6.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Although PGR's debt-to-equity ratio of 0.29 is very low, it is currently higher than that of the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market, PROGRESSIVE CORP-OHIO's return on equity exceeds that of both the industry average and the S&P 500.
- PROGRESSIVE CORP-OHIO has improved earnings per share by 5.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PROGRESSIVE CORP-OHIO increased its bottom line by earning $1.94 versus $1.48 in the prior year. For the next year, the market is expecting a contraction of 14.9% in earnings ($1.65 versus $1.94).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Insurance industry. The net income increased by 4.1% when compared to the same quarter one year prior, going from $308.60 million to $321.30 million.
- You can view the full analysis from the report here: PGR Ratings Report