Progressive: The Market Is Missing the Real Story

The market is constantly playing mind games with investors.

A current prime example of this is Progressive (PGR). If you don’t know the game, you are already behind. But this is the kind of stuff I love about the markets. The constant battle between price, fundamentals and time.

We have a great business and honestly not much has changed over the years. But now this is a stock that has bored investors and as a result, shares are on the decline.

Today, we are going to look at whether now is the perfect time to buy a boring business, or if shares are set to slide even lower.

Here’s what happened.

Down 33% from 52-Week High; What to Expect Next

Shares are down sharply in the past few months, collapsing 33% from its 52-week highs. And the catalyst everyone is watching for a potential turnaround is in earnings.

That didn’t happen in Q1.

Progressive Daily Chart

All eyes are on earnings for a potential turning point and Q1 results were a mixed bag:

Revenue $22.19B, up 8.7% YoY
GAAP EPS came in at $4.8, compared to $4.85 based on consensus
Net premiums earned $20.97B, up 8% YoY, beat Visible Alpha consensus of $20.72B
Policies-in-force 39.6M, climbing 9% YoY — but below Street expectations
Catastrophe losses fell YoY

The “miss” was not really about the top line.

It was about policies in force.

Progressive reported total policies in force of about 39.57 million, up from 32.69 million a year earlier, and slightly below the 39.58 million analyst estimate. That is a miss that investors did not ignore. They immediately punished the stock but let’s keep perspective.

Policies in force still grew 9% YoY. Net written premiums for Q1 rose to about $23.6B, and net income reached about $2.8B.

That’s a solid quarter by most books and points to a high-quality insurer still writing profitable business at scale.

The market cares about faster policy growth, they made that clear. And Progressive delivered profitable growth. But the two are not the same, the pace is key.

The Real Debate

The bearish argument is worth paying attention to.

Competition is picking up in the auto insurance industry and the pricing cycle is softening as repair costs and vehicle inflation continue to be a problem. That’s why investors are starting to look further out and ask how autonomous driving, new regulation and pricing pressures could eventually disrupt the current insurance model.

That’s a real risk.

But it’s also nothing new.

The auto insurance industry, and insurance in general, has always been brutally competitive. Progressive has felt some of those pressures. The combined ratio was 86.4% in Q1, compared to its long-standing goal of maintaining a ratio of 96 or better for the year. It did improve in March, to 88.8, compared to 90.9 a year earlier.

That is the part I think the market is underweighting, which leads us to one of the best things Progressive has going for it – its moats.

Progressive’s Moats

Progressive’s advantage is not one single item. It’s a combination of data, distribution and discipline.

One of which is Snapshot. This remains the company’s most important differentiators. Telematics gives Progressive more data on driver behavior, and in auto insurance, better data means better pricing. It’s something that you can get excited about for the company.

Then there’s Flo. It may seem like a marketing gimmick, but the brand recognition is there.

And there’s scale. Progressive already has it. Which means the smaller competitors struggle to make a dent in Progressive’s market share.

Progressive’s Moats

Progressive’s advantage is not one single item. It’s a combination of data, distribution and discipline.

Then there’s Flo. It may seem like a marketing gimmick, but the brand recognition is there.

And there’s scale. Progressive already has it. Which means the smaller competitors struggle to make a dent in Progressive’s market share.

Valuation

Now that we understand the broader drivers of the stock, let’s dive into price and valuation.

We have not quite reached a point where we would say Progressive is being priced like a broken company despite the sharp decline. But we can say with confidence it is also no longer being priced like an untouchable insurance play.

There’s volatility and that creates a better setup if you are bullish on the stock.

The stock is trading near a current P/E of roughly 10.6x based on 2025 actual earnings, with a 10.7% decline in 2026 consensus EPS growth rate.

Seeking Alpha’s valuation grade noted below holds a wide range driven by this expected 2026 decline. The grade for the trailing twelve months is a B-, but the forward relative valuation grade is a D+.

On one hand, the past twelve months have been a strong performance, and that’s based on actuals. The Forward P/E is based on expectations and should carry less weight. It also is tied to relative valuation for the sector, which improves to a lower P/E forward multiple. So, there’s quite a few things going on here.

For a company like Progressive, we can come to a consensus of our own using a few valuation approaches.

Base Case, Bull Case and Bear Case

In my book, Progressive deserves a premium to average insurers when underwriting quality is strong. A 14x to 16x normalized earnings multiple is reasonable for a company with this level of profitability, brand strength, and data advantage like we have discussed. If normalized earnings power lands around the mid-to-high teens per share over the next cycle, that supports a fair value range in the $250 to $275 area.

That is my base case.

The bull case is straightforward.

If Progressive keeps its combined ratio well below 96, continues to add policies, and proves that Snapshot and segmentation still create an edge in a more competitive market, investors will likely be willing to pay a higher multiple again.

In that case, $300 plus is back on the table.

Over a multi-year horizon, I think it is realistic.

Then we have the bear case. In my view, this is if policy growth continues to disappoint and pricing weakens.

In that scenario, we could see the market compress the earnings multiple further and treat Progressive more like a cyclical insurer than a growth play. That would likely keep the stock under pressure and could push it back toward the recent lows.

The 52-week low was around $191.75. That is the line I am watching.

Sigmanomics Insights: Forecast is All About Timing

Sigmanomics offers proprietary forecast to make sure your entrance and exit targets are lining up with price action.

Progressive forecast is feeling the pressures we just talked about and the weakness we have seen in its stock price.

Two out of the three forecast time frames are pointing to bearish trade setups.

That tells us now may not be the perfect time to jump in, but we are almost there. As we track the stock and update the forecast, we’ll know the timing is right when another zone shifts into a bullish trade setup.
That will help you align your overview, if bullish, with a clear entry signal.