NEW YORK (TheStreet) -- Shares of Progressive Corp. (PGR) are up 0.64% to $26.93 as a higher Gainshare factor suggests a favorable dividend announcement on the horizon, MKM Partners analysts said, maintaining their "buy" rating and $32 price target.
"Progressive's year-to-date Gainshare factor, which is used to determine the company's annual dividend, now stands at 1.31, better than the 1.2 in November 2013," analysts said about the Ohio-based insurance company.
"Last year, the company paid a Gainshare dividend of 49.29 cents and a special dividend of $1 per share. This year, we may see a similar dividend announcement by the time the company reports December results on January 28, 2015," analysts added.
Additionally, Progressive reported November operating income yesterday of 14 cents per share, in line with MKM estimates.
Separately, TheStreet Ratings team rates PROGRESSIVE CORP-OHIO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate PROGRESSIVE CORP-OHIO (PGR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, notable return on equity, growth in earnings per share and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Insurance industry average. The net income increased by 27.4% when compared to the same quarter one year prior, rising from $232.40 million to $296.10 million.
- PGR's revenue growth trails the industry average of 21.9%. Since the same quarter one year prior, revenues slightly increased by 5.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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 28.2% 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 10.3% in earnings ($1.74 versus $1.94).
- Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
- You can view the full analysis from the report here: PGR Ratings Report