Progressive (PGR) is predicted to ship a year-over-year im
Progressive (PGR) is predicted to ship a year-over-year improve in earnings on larger revenues when it stories outcomes for the quarter ended September 2020. This widely-known consensus outlook provides sense of the corporate’s earnings image, however how the precise outcomes evaluate to those estimates is a strong issue that might impression its near-term inventory worth.
The earnings report, which is predicted to be launched on October 14, 2020, would possibly assist the inventory transfer larger if these key numbers are higher than expectations. Alternatively, in the event that they miss, the inventory could transfer decrease.
Whereas the sustainability of the fast worth change and future earnings expectations will principally rely on administration’s dialogue of enterprise circumstances on the earnings name, it is value handicapping the chance of a constructive EPS shock.
Zacks Consensus Estimate
This insurer is predicted to submit quarterly earnings of $1.72 per share in its upcoming report, which represents a year-over-year change of +21.1%.
Revenues are anticipated to be $10.55 billion, up 11.4% from the year-ago quarter.
Estimate Revisions Development
The consensus EPS estimate for the quarter has been revised 5.31% larger over the past 30 days to the present stage. That is primarily a mirrored image of how the masking analysts have collectively reassessed their preliminary estimates over this era.
Buyers ought to take into account that an combination change could not all the time replicate the path of estimate revisions by every of the masking analysts.
Worth, Consensus and EPS Shock
Earnings Whisper
Estimate revisions forward of an organization’s earnings launch supply clues to the enterprise circumstances for the interval whose outcomes are popping out. Our proprietary shock prediction mannequin — the Zacks Earnings ESP (Anticipated Shock Prediction) — has this perception at its core.
The Zacks Earnings ESP compares the Most Correct Estimate to the Zacks Consensus Estimate for the quarter; the Most Correct Estimate is a newer model of the Zacks Consensus EPS estimate. The concept right here is that analysts revising their estimates proper earlier than an earnings launch have the newest data, which may doubtlessly be extra correct than what they and others contributing to the consensus had predicted earlier.
Thus, a constructive or adverse Earnings ESP studying theoretically signifies the seemingly deviation of the particular earnings from the consensus estimate. Nevertheless, the mannequin’s predictive energy is important for constructive ESP readings solely.
A constructive Earnings ESP is a powerful predictor of an earnings beat, notably when mixed with a Zacks Rank #1 (Sturdy Purchase), 2 (Purchase) or 3 (Maintain). Our analysis exhibits that shares with this mixture produce a constructive shock practically 70% of the time, and a stable Zacks Rank really will increase the predictive energy of Earnings ESP.
Please notice {that a} adverse Earnings ESP studying is just not indicative of an earnings miss. Our analysis exhibits that it’s tough to foretell an earnings beat with any diploma of confidence for shares with adverse Earnings ESP readings and/or Zacks Rank of 4 (Promote) or 5 (Sturdy Promote).
How Have the Numbers Formed Up for Progressive?
For Progressive, the Most Correct Estimate is larger than the Zacks Consensus Estimate, suggesting that analysts have just lately develop into bullish on the corporate’s earnings prospects. This has resulted in an Earnings ESP of +0.65%.
Alternatively, the inventory presently carries a Zacks Rank of #3.
So, this mixture signifies that Progressive will most definitely beat the consensus EPS estimate.
Does Earnings Shock Historical past Maintain Any Clue?
Whereas calculating estimates for an organization’s future earnings, analysts usually think about to what extent it has been capable of match previous consensus estimates. So, it is value looking on the shock historical past for gauging its affect on the upcoming quantity.
For the final reported quarter, it was anticipated that Progressive would submit earnings of $1.72 per share when it really produced earnings of $1.83, delivering a shock of +6.40%.
Over the past 4 quarters, the corporate has crushed consensus EPS estimates 4 occasions.
Backside Line
An earnings beat or miss might not be the only real foundation for a inventory shifting larger or decrease. Many shares find yourself shedding floor regardless of an earnings beat as a result of different components that disappoint traders. Equally, unexpected catalysts assist various shares achieve regardless of an earnings miss.
That mentioned, betting on shares which can be anticipated to beat earnings expectations does improve the chances of success. For this reason it is value checking an organization’s Earnings ESP and Zacks Rank forward of its quarterly launch. Make sure that to make the most of our Earnings ESP Filter to uncover the most effective shares to purchase or promote earlier than they’ve reported.
Progressive seems a compelling earnings-beat candidate. Nevertheless, traders ought to take note of different components too for betting on this inventory or staying away from it forward of its earnings launch.
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.