Progressive Stock Got Hit After Earnings. It’s Time to Buy One of America’s Great Companies.

Progressive has advantages in technology and data that make it the industry leader. (Courtesy Progressive)

Concerns about growth have weighed on shares, but they now look like a bargain.

PGR

Progressive Corp.

1-Year Price Chart

Created with Highstock 2.1.8

$220.59

as of market close October 23, 2025

Market Cap

$129.3 B

NTM P/E

13.3

Div Yield

0.2%

Beta

0.67

52 Week Range

$217.20

$292.99

Key Points

• Progressive’s stock has fallen over 20% from its April peak to around $218, including a 5% drop after recent mild earnings disappointment.
• Automobile insurance policies in force increased 15% year over year in September, a slowdown from 20% earlier this year.
• Progressive’s auto underwriting profit margin of 12% last year was 7.5 percentage points higher than the industry average.

Progressive is one of America’s great financial companies, with a phenomenal record of growth and stock market performance since its 1971 IPO.

And now shares are on sale after falling over 20% from their April peak to around $218, including a 5% drop on recent news of a mild earnings disappointment in the September quarter. The stock flirted with a 52-week low Friday even as the S&P 500 index moved to a new high.

Progressive, the No. 2 U.S. auto insurer, is a financial growth stock and, unfortunately, growth has been slowing in recent months. Though the company is still expanding rapidly, with automobile insurance policies in force up 15% year over year in September, that number is down from a 20% annual pace earlier this year.

Pricing is also coming under pressure. Auto insurance prices increased by double digits in 2023 and 2024, but Friday’s September consumer-price report showed a 0.3% decline in auto insurance premiums. At the same time, Progressive and other auto insurers are contending with continuing increases in the cost to repair damaged cars.

Combined, those factors suggest that Progressive’s growth could slow further. Its ample profit margins look set to decline in 2026, resulting in lower earnings relative to 2025.

The stock reaction, however, appears to be another instance of the market putting short-term concerns before the long-term outlook. Progressive still possesses advantages in technology and data that make it the industry leader, while its long-term growth story remains intact. The stock also looks reasonably priced, at 12 times projected 2025 earnings of nearly $18 a share and 13 times estimated 2026 profits of $16.55 a share—especially for one that has been so solid for so long.

“Progressive is a wonderful company,” says Greg Locraft, co-manager of the T. Rowe Price Financial Services fund, who calls it “the best-run” auto and homeowner’s insurer.

Long-term holders have nothing to complain about. The stock is up over 2,500-fold since Progressive’s 1971 initial public offering at a split-adjusted price of about eight cents, and it has outperformed both the S&P 500 and rival Berkshire Hathaway , which owns auto insurer Geico, over the past five, 10, and 20 years.

Why has Progressive done so well? It was early in using telematics, or real-time driving information, and other analytics to price policies. While the company does use brokers, it’s larger presence in the faster-growing business of selling policies directly to consumers. It uses heavy advertising, including its pitchwoman Flo, to build brand awareness. Progressive also empowers its managers in 50 states to price policies based on industry conditions and competitive dynamics.

The proof is in the results. The company’s revenue rose about 20% in both 2023 and 2024 and is expected to rise 13% this year. Its auto underwriting profit margin of 12% last year was 7.5 points higher than the industry average, according to AM Best, and the gap could be similar this year. Based on its return on equity, Progressive is handily outperforming other top financial companies like JPMorgan Chase and Chubb as well. “Progressive is a growth machine,” says Adam Seessel, chief investment officer at Gravity Capital Management. “It’s a technology company that sells insurance.”

Progressive has plenty of room to expand in a fragmented auto insurance market. With a market share of just 17%—about two percentage points behind No. 1 State Farm—it can take share from smaller public and mutual insurers without its technology advantage. It may only be a matter of time before it surpasses State Farm, as it did with Berkshire’s Geico, to become the largest auto insurer in the U.S.

Geico and Progressive used to show similar growth, but Progressive has sped ahead in recent years. The contrast between the two is stark. Progressive’s auto policies in force are up 75% to 26.2 million since the end of 2019, while Geico’s policies are down about 10% to around 16 million as it moved to fix major technology problems, Barron’s estimates. Berkshire CEO Warren Buffett hailed Geico’s “spectacular improvement” in his annual letter earlier this year, but it’s debatable whether the insurer is anywhere close to Progressive in technology, although its margins are now comparable.

Progressive doesn’t get the attention of other great financial companies, and that’s partially by design. It doesn’t meet with institutional investors, avoids industry conferences, and it’s based outside Cleveland, not exactly a hotbed of financial activity. Still, the company is forthcoming about strategy on its quarterly earnings calls, with the next one scheduled for early November. It’s also the only company in the S&P 500 that reports financial results monthly.

Not everything is rosy. High auto insurance rates are becoming a potent political issue, and now prices are flat, or falling in states like Florida. Progressive was so profitable in that state following legal reforms in 2023 that it will rebate some $950 million to Florida policyholders starting in 2026, based on outsize earnings from 2023 to 2025 that exceeded statutory limits.

The insurance industry is contending with the high cost of repairing cars, while the rise of self-driving cars over the next decade could cause accidents to drop, neutralizing some of Progressive’s underwriting advantages. All this is likely increasing competitive pressures and squeezing Progressive’s margins. The company, however, is expected to comfortably exceed its minimum underwriting profit-margin target of 4% and continue to take market share.

Progressive also has an innovative capital-return program. Like another industry leader, Costco Wholesale, it supplements a tiny regular dividend—now 40 cents annually—with periodic special dividends when it builds up excess capital. Progressive declared a $4.50 special dividend at the end of 2024, and T. Rowe’s Locraft expects a similar declaration at the end of this year based on strong profits this year and possibly another special dividend in 2026.

Progressive’s stock also commands an undemanding valuation. At 12 times 2025 earnings, its price/earnings ratio is well below its 10-year average of 16 and the S&P 500’s current 22.

Raymond James analyst Greg Peters recently reiterated what he called an “out of consensus” Outperform rating on the stock, citing his expectation that Progressive will continue to generate above-target profitability. While he cut his price target to $265, from $305 a share, that still suggests more than 20% upside.

When great companies go on sale, it’s usually a good time to buy. And make no mistake, Progressive is a great company.

Write to Andrew Bary at andrew.bary@barrons.com