Over the last six months, Progressive’s shares have sunk to $205.11, producing a disappointing 16.5% loss - a stark contrast to the S&P 500’s 2.3% gain. This might have investors contemplating their next move.
Given the weaker price action, is now an opportune time to buy PGR? Find out in our full research report, it’s free.
Why Are We Positive On PGR?
Starting as a small auto insurance company in 1937 with a pioneering focus on high-risk drivers, Progressive (NYSE: PGR) is a major auto, property, and commercial insurance provider that offers policies through independent agents, online platforms, and over the phone.
1. Net Premiums Earned Skyrocket, Fueling Growth Opportunities
When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are:
- Gross premiums - what’s ceded to reinsurers as a risk mitigation and transfer strategy
Progressive’s net premiums earned has grown at a 18% annualized rate over the last two years, much better than the broader insurance industry and in line with its total revenue.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Progressive’s EPS grew at 19.4% compounded annual growth rate over the last five years, higher than its 15.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Projected BVPS Growth Is Remarkable
Book value per share (BVPS) growth is driven by an insurer’s ability to earn consistent underwriting profits while generating strong investment returns.
Over the next 12 months, Consensus estimates call for Progressive’s BVPS to grow by 29.7% to $51.69, elite growth rate.
Final Judgment
These are just a few reasons why Progressive ranks near the top of our list. After the recent drawdown, the stock trades at 3.1× forward P/B (or $205.11 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.
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