The Progressive Corporation PGR reported solid February 2025 results, wherein the top and bottom lines increased year over year. Net premiums written improved 17%, driven by the strong performance of operating businesses. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 420 basis points (bps) from the prior-year quarter to 84.1.
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. This insurer is set to deliver steady profitability, given its solid market presence, a convincing portfolio of products and services, and underwriting and operational expertise.
Sneak Peek Into PGR’s February Results
PGR’s February’s 2025 earnings per share of $1.58 improved 28% year over year. Operating revenues increased 18% to $6.9 billion.
Policies in force were solid in the Personal Lines segment, increasing 18% from the year-ago month to 34.5 million. Special Lines improved 9% to 6.6 million. In the Personal Auto segment, Direct Auto increased 25% year over year to 14.4 million, whereas Agency Auto grew 18% to 9.9 million. Progressive’s Commercial Auto segment rose 5% to 1.2 million. The Property business had 3.6 million policies in force, up 12%.
What’s Driving Progressive
Being a leading auto insurer, PGR has a compelling product portfolio, which, coupled with prudent underwriting, helps it maintain healthy policies in force and a solid retention ratio. This, in turn, drives better premiums. Policy life expectancy (PLE), a measure of customer retention, has improved in the last few years across all business lines. Distinctive new auto insurance options, along with competitive pricing, should help sustain improvement in PLE.
As part of its growth strategy, Progressive is prioritizing auto bundles, lowering exposure to risky properties and increasing segmentation through product rollouts. The company remains focused on increasing the share of auto and home bundled households, investing in mobile applications, and rolling out products in a higher number of states.
Over a decade, PGR’s combined ratio has averaged less than 93%, which compares favorably with the industry average combined ratio of more than 100%. Prudent underwriting, coupled with favorable reserve development, should help the company maintain its momentum. Also, its reinsurance program shields the balance sheet from the impacts of catastrophe events and active weather years.
The company’s solid cash flow ensures continuous investment in growth initiatives, including digitalization to improve margins. PGR has been enhancing its book value and lowering leverage, banking on operational expertise. Though its leverage compares unfavorably with the industry average, the times interest earned outperforms the industry.
Optimistic Analyst Sentiment on PGR
Ten analysts have raised 2025 estimates, whereas six have hiked the same for 2026 in the past 30 days. The Zacks Consensus Estimate for 2025 has moved 3.6% higher, whereas the same for 2026 has moved 1.9% north in the same time frame.
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Progressive’s Growth Story
The Zacks Consensus Estimate for Progressive’s 2025 earnings is pegged at $15.30 per share, indicating an increase of 8.9% from the year-ago reported figure on 16.2% higher revenues of $87.3 billion. The consensus estimate for 2026 earnings is pegged at $15.69 per share, indicating a year-over-year increase of 2.5% on 10.5% higher revenues of $96.5 billion.
The long-term earnings growth rate is pegged at 10.9%, better than the industry average of 8%.
PGR: An Outperformer
Shares of Progressive have gained 13.9% year to date, outperforming the industry’s rally of 13%, the Finance sector’s rise of 2.4% and the Zacks S&P 500 composite’s slip of 4.1% in the said time frame. The outperformance is backed by a compelling product portfolio, operational expertise and a solid capital position.
Progressive Vs Industry, Sector, S&P 500
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PGR Trades Above 50-Day Moving Average
Progressive shares are trading above the 50-day moving average, indicating a bullish trend.
Progressive Price Movement Vs. 50-Day Moving Average
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Average Target Price for PGR Suggests Solid Upside
Based on short-term price targets offered by 18 analysts, the Zacks average price target is $293.33 per share. The average suggests a potential 6.8% upside from the last closing price.
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PGR Shares Are Expensive
PGR is currently expensive. 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.
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Shares of some auto insurers like Allstate Corporation ALL and Travelers Companies TRV are also trading at a premium to the industry.
Progressive’s Favorable Return on Capital
Return on equity for the trailing 12 months was 33.8%, comparing favorably with the industry’s 8.3%. This reflects its efficiency in utilizing shareholders’ funds.
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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 25.1%, better than the industry average of 6.4%.
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What Should You Do With PGR Stock?
Progressive’s leadership position, better pricing and prudent underwriting standards should drive its shares. Optimistic growth projections, positive analyst sentiment and an impressive dividend history instill confidence in PGR.
Thus, despite the premium valuation, this Zacks Rank #1 (Strong Buy) stands a fair chance to be investors’ favorite and, therefore, is worth adding to their portfolios. You can see the complete list of today’s Zacks #1 Rank stocks here.
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