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Progressive (PGR) Stock Gains 34% YTD: Will the Rally Last?
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Shares of The Progressive Corporation (PGR - Free Report) have rallied 34.2% year to date, compared with the industry’s increase of 15.2%, the Finance sector’s rise of 4.8% and the Zacks S&P 500 composite’s gain of 10.3%. With a market capitalization of $125.2 billion, the average volume of shares traded in the last three months was 2.7 million.
A compelling portfolio, leadership position, strength in Vehicle and Property businesses, healthy policies in force, retention and a solid capital position continue to drive this Zacks Rank #1 (Strong Buy) insurer.
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved north by 7.3% and 3.8%, respectively, in the past 30 days, reflecting analysts’ optimism.
PGR’s trailing 12-month return on equity is 29.4%, ahead of the industry average of 7.8%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Also, return on invested capital (ROIC) has been increasing over the last few quarters amid capital investment made over the same time frame. This reflects PGR’s efficiency in utilizing funds to generate income. The company’s ROIC in the trailing 12 months was 19.7%, better than the industry average of 5.9%.
It has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum. Back-tested results have shown that stocks with a VGM Score of A or B and a Zacks Rank #1 or 2 (Buy) offer better returns.
Image Source: Zacks Investment Research
Can the Stock Retain the Momentum?
The Zacks Consensus Estimate for Progressive’s 2024 earnings is pegged at $11.29 per share, indicating an increase of 84.8% from the year-ago reported figure on 18.2.% higher revenues of $73 billion. The consensus estimate for 2025 earnings is pegged at $11.93 per share, indicating a year-over-year increase of 5.7% on 12.6% higher revenues of $82.2 billion.
The long-term earnings growth rate is currently pegged at 22.5%, better than the industry average of 10.5%. We expect the 2026 bottom line to increase at a three-year CAGR of 25.4%. Earnings of PGR rose 5.9% in the last five years. It has a Growth Score of A.
PGR is one of the country’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. Net premiums written increased at a four-year (2019-2023) CAGR of 13.2%. Policies in force have increased 32.8% over the same timeframe.
A compelling product portfolio, its leadership position, healthy policies in force, better pricing and a solid retention ratio should help PGR generate higher premiums. Its premiums written increased 11% in the last 10 years and surpassed the industry average of 4%. We estimate 2026 net written premiums to increase at a three-year CAGR of 12%.
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 should continue to support Progressive in delivering a better combined ratio.
In tandem with the industry’s trends of making continuous investments in technology, Progressive has also been investing to ramp up digitalization.
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.
Progressive has an impressive history of distributing wealth to shareholders via dividends and share buybacks. It has been paying dividends uninterruptedly since 1971, yielding 0.3%, and has a 25 million share buyback program under its authorization. Notably, its free cash flow conversion has been more than 100% in the last many quarters, reflecting its solid earnings.
Allstate delivered a four-quarter average earnings surprise of 41.88%. The stock has gained 21.6% year to date. The Zacks Consensus Estimate for ALL’s 2024 and 2025 earnings indicates a year-over-year increase of 1,479% and 13.8%, respectively.
Arch Capital delivered a four-quarter average earnings surprise of 28.41%. The stock has gained 31.9% year to date. The Zacks Consensus Estimate for ACGL’s 2024 and 2025 earnings indicates a year-over-year increase of 0.7% and 5.8%, respectively.
RLI delivered a four-quarter average earnings surprise of 132.49%. The stock has gained 9.6% year to date. The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings indicates a year-over-year increase of 18% and 2.6%, respectively.
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Progressive (PGR) Stock Gains 34% YTD: Will the Rally Last?
Shares of The Progressive Corporation (PGR - Free Report) have rallied 34.2% year to date, compared with the industry’s increase of 15.2%, the Finance sector’s rise of 4.8% and the Zacks S&P 500 composite’s gain of 10.3%. With a market capitalization of $125.2 billion, the average volume of shares traded in the last three months was 2.7 million.
A compelling portfolio, leadership position, strength in Vehicle and Property businesses, healthy policies in force, retention and a solid capital position continue to drive this Zacks Rank #1 (Strong Buy) insurer.
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved north by 7.3% and 3.8%, respectively, in the past 30 days, reflecting analysts’ optimism.
PGR’s trailing 12-month return on equity is 29.4%, ahead of the industry average of 7.8%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Also, return on invested capital (ROIC) has been increasing over the last few quarters amid capital investment made over the same time frame. This reflects PGR’s efficiency in utilizing funds to generate income. The company’s ROIC in the trailing 12 months was 19.7%, better than the industry average of 5.9%.
It has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum. Back-tested results have shown that stocks with a VGM Score of A or B and a Zacks Rank #1 or 2 (Buy) offer better returns.
Image Source: Zacks Investment Research
Can the Stock Retain the Momentum?
The Zacks Consensus Estimate for Progressive’s 2024 earnings is pegged at $11.29 per share, indicating an increase of 84.8% from the year-ago reported figure on 18.2.% higher revenues of $73 billion. The consensus estimate for 2025 earnings is pegged at $11.93 per share, indicating a year-over-year increase of 5.7% on 12.6% higher revenues of $82.2 billion.
The long-term earnings growth rate is currently pegged at 22.5%, better than the industry average of 10.5%. We expect the 2026 bottom line to increase at a three-year CAGR of 25.4%. Earnings of PGR rose 5.9% in the last five years. It has a Growth Score of A.
PGR is one of the country’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. Net premiums written increased at a four-year (2019-2023) CAGR of 13.2%. Policies in force have increased 32.8% over the same timeframe.
A compelling product portfolio, its leadership position, healthy policies in force, better pricing and a solid retention ratio should help PGR generate higher premiums. Its premiums written increased 11% in the last 10 years and surpassed the industry average of 4%. We estimate 2026 net written premiums to increase at a three-year CAGR of 12%.
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 should continue to support Progressive in delivering a better combined ratio.
In tandem with the industry’s trends of making continuous investments in technology, Progressive has also been investing to ramp up digitalization.
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.
Progressive has an impressive history of distributing wealth to shareholders via dividends and share buybacks. It has been paying dividends uninterruptedly since 1971, yielding 0.3%, and has a 25 million share buyback program under its authorization. Notably, its free cash flow conversion has been more than 100% in the last many quarters, reflecting its solid earnings.
Other Stocks to Consider
Some other top-ranked stocks from the insurance space are The Allstate Corporation (ALL - Free Report) , Arch Capital Group Ltd (ACGL - Free Report) and RLI Corp (RLI - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Allstate delivered a four-quarter average earnings surprise of 41.88%. The stock has gained 21.6% year to date. The Zacks Consensus Estimate for ALL’s 2024 and 2025 earnings indicates a year-over-year increase of 1,479% and 13.8%, respectively.
Arch Capital delivered a four-quarter average earnings surprise of 28.41%. The stock has gained 31.9% year to date. The Zacks Consensus Estimate for ACGL’s 2024 and 2025 earnings indicates a year-over-year increase of 0.7% and 5.8%, respectively.
RLI delivered a four-quarter average earnings surprise of 132.49%. The stock has gained 9.6% year to date. The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings indicates a year-over-year increase of 18% and 2.6%, respectively.