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Progressive Stock Moves Above 50-Day SMA: What Should Investors Know?
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Shares of The Progressive Corporation (PGR - Free Report) closed at $249.13, above its 50-day moving average of $226.22, indicating a bullish trend. Shares gained 23% in the past three months, outperforming the industry’s increase of 12.5%, the Finance sector’s rise of 0.1% and the Zacks S&P 500 composite’s increase of 0.3% in the said time frame. The outperformance is backed by a compelling product portfolio, operational expertise and a solid capital position.
Progressive is seen as a leader in product, service and distribution innovation, especially in personal auto. It is also a leader in underwriting technology and the application of quantitative analytics in pricing and risk selection. PGR’s rates are very competitive in all its markets, and it continues to gain from its expanded multi-product offering.
Efforts to increase its share of auto and home bundled households, i.e., Robinsons, invest in mobile applications and roll out new products in a higher number of states are some of the strategic infinitives taken by PGR to accelerate earnings.
PGR Price Movement vs. 50 Day Moving Average
Image Source: Zacks Investment Research
PGR Outperforms Industry, Sector, S&P 500
Image Source: Zacks Investment Research
Positive Analyst Sentiment Instills Confidence in PGR
Out of the 12 analysts covering PGR, 11 raised estimates for 2024 in the past 60 days, while 10 have raised the same for 2025.
Earnings estimates for Progressive for 2024 and 2025 have moved up 10.6% and 6.1% north, respectively, over the past 60 days.
Image Source: Zacks Investment Research
Investment Thesis
A compelling product portfolio, its leadership position, healthy policies in force, better pricing and a solid retention ratio should drive premium for Progressive. It is one of the nation’s largest auto insurance groups, the largest seller of motorcycle and boat policies, the market leader in commercial auto insurance, and one of the top 15 homeowners carriers based on premiums written.
Prioritizing Progressive auto bundles and lower-risk properties, as well as evolving segmentation through the rollout of the newest product model, should drive growth at PGR.
Policy life expectancy (PLE), a measure of customer retention, has improved in the last few years across all business lines. Strategic initiatives to provide consumers with a distinctive new auto insurance option along with competitive pricing should help Progressive deliver solid PLE. The insurer has been focusing on cross-selling homes with auto insurance.
PGR’s combined ratio averaged less than 93% over the last 10 years and compared favorably with the industry average of more than 100%. Prudent underwriting coupled with favorable reserve development, a reinsurance program to shield its balance sheet from the impact of catastrophe events and active weather years should limit the erosion of profit.
PGR strategically maintains an investment portfolio with investments skewed toward U. S. Treasuries. A solid capital position helps it navigate a volatile market as well as invest in growth opportunities.
In tandem with the industry’s trends of making continuous investments in technology, Progressive has also been investing to ramp up digitalization.
Progressive’s debt has been increasing over the last few years. As of June 30, 2024, the company’s debt was $6.9 billion, up 0.1% year over year. Leverage compared unfavorably with the industry average.
PGR’s Optimistic Growth Story
The Zacks Consensus Estimate for Progressive’s 2024 earnings is pegged at $12.30 per share, indicating an increase of 101.3% from the year-ago reported figure on 19.3% higher revenues of $73.7 billion. The consensus estimate for 2025 earnings is pegged at $13.01 per share, indicating a year-over-year increase of 5.8% on 13.9% higher revenues of $83.9 billion. The long-term earnings growth rate is currently pegged at 24.9%, better than the industry average of 11.1%. It has a Growth Score of A.
Progressive’s Favorable Return on Capital
Return on equity (ROE) for the trailing 12 months was 33.01%, comparing favorably with the industry’s 8%. This reflects its efficiency in utilizing shareholders’ funds.
Image Source: Zacks Investment Research
Also, return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame. This reflects PGR’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 23.1%, better than the industry average of 6.1%.
Image Source: Zacks Investment Research
PGR’s Expensive Valuation
PGR is expensive currently. It is trading at a P/B multiple of 6.25, higher than the industry average of 1.62. Given its market-leading presence, growth prospects, rising estimates and better return on invested capital, its premium valuation is justified.
Image Source: Zacks Investment Research
Shares of other insurers likeThe Allstate Corporation (ALL - Free Report) ) Berkshire Hathaway Inc. (BRK.B - Free Report) are also trading at a multiple higher than the industry average.
To Conclude
Progressive remains committed to enhancing customers' experience through improved services. Despite increasing expenses, this Zacks Rank #3 (Hold) has been continually expanding its margins. Progressive has an impressive history of paying dividends uninterruptedly since 1971 marking its efforts of prudent wealth distribution to shareholders. It has a VGM Score of A.
However, given the premium valuation, investors may wait for a better entry point as of now. Those who have shares of PGR in their portfolio should hold it, as this behemoth is unlikely to disappoint.
Image: Shutterstock
Progressive Stock Moves Above 50-Day SMA: What Should Investors Know?
Shares of The Progressive Corporation (PGR - Free Report) closed at $249.13, above its 50-day moving average of $226.22, indicating a bullish trend. Shares gained 23% in the past three months, outperforming the industry’s increase of 12.5%, the Finance sector’s rise of 0.1% and the Zacks S&P 500 composite’s increase of 0.3% in the said time frame. The outperformance is backed by a compelling product portfolio, operational expertise and a solid capital position.
Progressive is seen as a leader in product, service and distribution innovation, especially in personal auto. It is also a leader in underwriting technology and the application of quantitative analytics in pricing and risk selection. PGR’s rates are very competitive in all its markets, and it continues to gain from its expanded multi-product offering.
Efforts to increase its share of auto and home bundled households, i.e., Robinsons, invest in mobile applications and roll out new products in a higher number of states are some of the strategic infinitives taken by PGR to accelerate earnings.
PGR Price Movement vs. 50 Day Moving Average
Image Source: Zacks Investment Research
PGR Outperforms Industry, Sector, S&P 500
Image Source: Zacks Investment Research
Positive Analyst Sentiment Instills Confidence in PGR
Out of the 12 analysts covering PGR, 11 raised estimates for 2024 in the past 60 days, while 10 have raised the same for 2025.
Earnings estimates for Progressive for 2024 and 2025 have moved up 10.6% and 6.1% north, respectively, over the past 60 days.
Image Source: Zacks Investment Research
Investment Thesis
A compelling product portfolio, its leadership position, healthy policies in force, better pricing and a solid retention ratio should drive premium for Progressive. It is one of the nation’s largest auto insurance groups, the largest seller of motorcycle and boat policies, the market leader in commercial auto insurance, and one of the top 15 homeowners carriers based on premiums written.
Prioritizing Progressive auto bundles and lower-risk properties, as well as evolving segmentation through the rollout of the newest product model, should drive growth at PGR.
Policy life expectancy (PLE), a measure of customer retention, has improved in the last few years across all business lines. Strategic initiatives to provide consumers with a distinctive new auto insurance option along with competitive pricing should help Progressive deliver solid PLE. The insurer has been focusing on cross-selling homes with auto insurance.
PGR’s combined ratio averaged less than 93% over the last 10 years and compared favorably with the industry average of more than 100%. Prudent underwriting coupled with favorable reserve development, a reinsurance program to shield its balance sheet from the impact of catastrophe events and active weather years should limit the erosion of profit.
PGR strategically maintains an investment portfolio with investments skewed toward U. S. Treasuries. A solid capital position helps it navigate a volatile market as well as invest in growth opportunities.
In tandem with the industry’s trends of making continuous investments in technology, Progressive has also been investing to ramp up digitalization.
Progressive’s debt has been increasing over the last few years. As of June 30, 2024, the company’s debt was $6.9 billion, up 0.1% year over year. Leverage compared unfavorably with the industry average.
PGR’s Optimistic Growth Story
The Zacks Consensus Estimate for Progressive’s 2024 earnings is pegged at $12.30 per share, indicating an increase of 101.3% from the year-ago reported figure on 19.3% higher revenues of $73.7 billion. The consensus estimate for 2025 earnings is pegged at $13.01 per share, indicating a year-over-year increase of 5.8% on 13.9% higher revenues of $83.9 billion. The long-term earnings growth rate is currently pegged at 24.9%, better than the industry average of 11.1%. It has a Growth Score of A.
Progressive’s Favorable Return on Capital
Return on equity (ROE) for the trailing 12 months was 33.01%, comparing favorably with the industry’s 8%. This reflects its efficiency in utilizing shareholders’ funds.
Image Source: Zacks Investment Research
Also, return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame. This reflects PGR’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 23.1%, better than the industry average of 6.1%.
Image Source: Zacks Investment Research
PGR’s Expensive Valuation
PGR is expensive currently. It is trading at a P/B multiple of 6.25, higher than the industry average of 1.62. Given its market-leading presence, growth prospects, rising estimates and better return on invested capital, its premium valuation is justified.
Image Source: Zacks Investment Research
Shares of other insurers likeThe Allstate Corporation (ALL - Free Report) ) Berkshire Hathaway Inc. (BRK.B - Free Report) are also trading at a multiple higher than the industry average.
To Conclude
Progressive remains committed to enhancing customers' experience through improved services. Despite increasing expenses, this Zacks Rank #3 (Hold) has been continually expanding its margins. Progressive has an impressive history of paying dividends uninterruptedly since 1971 marking its efforts of prudent wealth distribution to shareholders. It has a VGM Score of A.
However, given the premium valuation, investors may wait for a better entry point as of now. Those who have shares of PGR in their portfolio should hold it, as this behemoth is unlikely to disappoint.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.