Progressive Moves Above 50 and 200-Day SMAs: How to Play the Stock

Shares of The Progressive Corporation PGR continue to trend up, driven by its robust market presence, diverse range of products and services, and strong underwriting and operational capabilities. PGR is now trending above its 50 and 200-simple moving average (SMA), indicating the possibility of an uptrend ahead. Shares closed at $278.75 yesterday, a 4.9% discount from its 52-week high of $73.53, indicating room for growth. The 50 and 200-day SMAs are key indicators for traders and analysts to identify support and resistance levels. These are considered particularly important as they are the first marker of an uptrend or downtrend. Progressive Price Movement Vs. 50 and 200-Day Moving AverageImage Source: Zacks Investment ResearchPGR: An OutperformerShares of PGR have gained 16.4% year to date, outperforming the industry’s rally of 10.3%, the Finance sector’s increase of 3.9% and the Zacks S&P 500 composite’s decline of 1.8%, respectively, in the said time frame.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.Progressive Vs Industry, Sector, S&P 500Image Source: Zacks Investment ResearchShares of The Allstate Corporation ALL and The Travelers Companies Inc. TRV, two other auto insurers, have gained 7.5% and 14.5%, respectively, in the said time frame. Travelers is a prominent player in the U.S. auto, homeowners, and commercial property-casualty insurance market. Its solid market position and well-executed growth strategies are expected to fuel ongoing expansion across both personal and commercial segments. The company is well-equipped for continued growth, supported by high customer retention, enhanced pricing, rising new business volumes and positive trends in renewal premiums.Allstate is refining its business approach by focusing on its core competencies and exiting less profitable segments. The company expects growth in total Property-Liability policies in force this year, supported by higher auto insurance renewal rates and steady gains in new business. Strengthened by increasing premiums, a growing protection services division and continued streamlining initiatives, Allstate is well-positioned for long-term growth.PGR is ExpensivePGR is currently expensive. It is trading at a P/B multiple of 5.64, higher than the industry average of 1.54. Image Source: Zacks Investment ResearchShares of Allstate and Travelers are also trading at a premium to the industry.Factors Favoring PGR StockProgressive is well-positioned for growth through strategic initiatives that involve emphasizing auto insurance bundles, reducing exposure to high-risk properties, and enhancing segmentation with new product launches.A strong product portfolio and disciplined underwriting have supported a healthy number of policies in force, while a solid retention rate continues to drive premium growth. Policy Life Expectancy (PLE), a key indicator of customer retention, has steadily improved across all business lines in recent years. Innovative auto insurance offerings and competitive pricing are expected to further support PLE growth.In alignment with industry trends, PGR has embraced digital transformation, including the integration of artificial intelligence. Over the past decade, the company has maintained an average combined ratio below 93%, outperforming the industry average of over 100%. This reflects prudent underwriting practices and favorable reserve development, both of which contribute to its sustained momentum.Progressive’s comprehensive reinsurance program provides significant protection against catastrophic events and adverse weather, helping to safeguard its balance sheet. Strong cash flow allows for continued investment in growth initiatives, particularly in digital technologies aimed at improving efficiency and margins. Additionally, the company has been steadily enhancing its book value and reducing leverage.While its leverage remains slightly above the industry average, its times interest earned ratio exceeds industry norms, highlighting its solid financial position and operational strength.Optimistic Analyst Sentiment on PGRFour analysts have raised earnings estimates for 2025 and 2026 in the past seven days. The Zacks Consensus Estimate for 2025 and 2026 has moved 1.2% and 0.5% north, respectively, in the same time frame.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for Progressive’s 2025 earnings is pegged at $16.00 per share, indicating an increase of 13.9% from the year-ago reported figure, while the same for 2026 is pegged at $16.06 per share, indicating a year-over-year increase of 0.4%.The long-term earnings growth rate is pegged at 10.2%, better than the industry average of 6.9%. Its Growth Score is A.Average Target Price for PGR Suggests Solid UpsideBased on short-term price targets offered by 18 analysts, the Zacks average price target is $301.89 per share. The average suggests a potential 8.5% upside from the last closing price.Image Source: Zacks Investment ResearchProgressive’s Favorable Return on CapitalReturn on equity for the trailing 12 months was 33.5%, comparing favorably with the industry’s 7.8%. This reflects its efficiency in utilizing shareholders’ funds. Image Source: Zacks Investment ResearchAlso, 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 18.7%, better than the industry average of 6%.Image Source: Zacks Investment ResearchWhat to Do With PGR Stock?Progressive’s dominant market position, effective pricing approach, and robust underwriting standards are anticipated to sustain the stock’s momentum. Positive growth projections, upbeat analyst sentiment, a solid history of dividend payouts, and a VGM Score of A further boost investor confidence in PGR.However, rising repair costs weigh on auto insurance margins. Given the premium valuation, it is better to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Travelers Companies, Inc. (TRV): Free Stock Analysis Report The Allstate Corporation (ALL): Free Stock Analysis Report The Progressive Corporation (PGR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks