4. The Progressive Corporation (NYSE:PGR)
Upside Potential as of January 9: 12.41%
One of the largest auto insurers in the US, Progressive Corporation (NYSE:PGR) offers specialized lines in addition to private and commercial auto insurance. It currently has over 20 million personal auto policies in effect. The business sells its products directly to consumers via the phone, online, and through independent insurance brokers in the US and Canada. Its premiums are almost evenly split between the agent and direct channels. Through an acquisition in 2015, the company branched out into homeowners insurance and now offers commercial auto products.
The Progressive Corporation (NYSE:PGR), one of the best financial stocks and one of the most successful franchises in the insurance business has consistently generated returns that are at the top of the market. However, the business has seen a great deal of volatility as a result of the recent fluctuations in the auto insurance market.
The Progressive Corporation (NYSE:PGR) had a strong third quarter, with revenue of $19.46 billion, a 27% year-over-year increase, and GAAP EPS of $3.97, $0.08 more than anticipated. The company’s combined ratio of 89% revealed profitability because it paid out less in claims and expenses than it made in premiums. The firm added a record 1.6 million new policies due to significant media investment and strong demand. Strong growth in both direct and agency channels was the result of record-high direct channel applications and improved customer conversions, positioning the company for sustained gains in market share.
JPMorgan increased its price target on The Progressive Corporation (NYSE:PGR) from $251 to $256. Going into 2025, the analyst is still optimistic about business trends in the property and casualty industry and believes that the group will perform better because of its defensive risk profile and consistent firm pricing. In a research note, the analyst warned investors that current valuations, high sentiment, and optimistic earnings expectations “make the upside in stocks less compelling than a year ago.” Due to a favorable perception of margins, the company is most optimistic about personal lines stocks by segment.
Thomas Bancroft’s Makaira Partners was the largest stakeholder in the company from among the funds in Insider Monkey’s database. It owns 603,603 shares worth $153.17 million as of Q3.
Bretton Fund stated the following regarding The Progressive Corporation (NYSE:PGR) in its Q3 2024 investor letter:
“We think The Progressive Corporation (NYSE:PGR) is the most sophisticated auto insurer in the business. It leverages its vast amount of driver data and is usually one of the first in the industry to recognize important shifts in things like driver behavior and collision costs. Progressive was one of the first to raise rates aggressively in 2021 to offset the higher costs from the more frequent car crashes and higher repair costs post-Covid. By raising prices before its competitors did, Progressive lost customers and wasn’t able to grow as fast as it usually does. The rest of the industry has since caught up and increased rates. Progressive’s rates are now comparatively attractive once again, and that’s led to highly profitable growth. Through September 30, its premiums are up 20% over last year, which is great for a low-growth industry like auto insurance. Progressive added 1.5% to the fund this quarter.”