Progressive Stock Falls 5% in 3 Months: Should You Buy the Dip?

Shares of The Progressive Corporation PGR have lost 5.4% in the past three months, outperforming the industry’s decline of 6.3%. However, the stock has underperformed the Finance sector’s increase of 3.7% and the Zacks S&P 500 composite’s increase of 6.8% in the said time frame.PGR is now trending below its 50-day simple moving average (SMA), indicating the possibility of a downside ahead. 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 Allstate Corporation ALL and Travelers Companies TRV, two other auto insurers, have lost 8.3% and 0.4%, respectively, in the said time frame. Travelers holds a leading position in the U.S. auto, homeowners, and commercial property-casualty insurance markets. Its solid market standing and well-executed growth strategies are set to support ongoing expansion across both personal and commercial segments. The company is well-positioned for long-term growth, driven by high customer retention, strategic pricing improvements, rising new business volumes, and positive momentum in renewal premiums.Allstate is refining its strategy by focusing on its core strengths and exiting underperforming segments. The company projects growth in total Property-Liability policies in force this year, supported by higher auto insurance renewal rates and steady increases in new business. Backed by rising premium income, a growing protection services division, and continued operational streamlining, Allstate is well-positioned to achieve sustained long-term growth.PGR Shares Are ExpensivePGR is currently expensive. It is trading at a P/B multiple of 5.26, higher than the industry average of 1.57. Image Source: Zacks Investment ResearchShares of Allstate and Travelers are also trading at a premium to the industry.Factors Favoring PGR StockProgressive is strategically positioned for sustained growth, supported by initiatives such as promoting bundled auto insurance, reducing exposure to high-risk properties, and enhancing segmentation through innovative product launches. Its robust product suite and disciplined underwriting have driven a strong volume of policies in force, while high retention rates continue to support premium growth. Policy Life Expectancy (PLE) — a critical measure of customer retention — has shown consistent improvement across all business lines, with innovative offerings and competitive pricing expected to drive further gains.Aligning with broader industry trends, Progressive has embraced digital transformation, notably through the integration of artificial intelligence. The company has maintained an average combined ratio below 93% over the past decade —  much better than the industry average of over 100% — reflecting effective underwriting and favorable reserve development that continue to fuel performance.A well-structured reinsurance program provides substantial protection against catastrophic events and severe weather, reinforcing the company’s financial stability. Strong cash flow generation supports ongoing investment in growth-focused initiatives, especially digital technologies that enhance efficiency and margin expansion. Meanwhile, Progressive has consistently increased its book value and made strides in lowering its leverage.While leverage remains slightly above the industry norm, Progressive’s superior times interest earned ratio highlights its solid financial health and operational strength.Optimistic Analyst Sentiment on PGRSeven analysts have raised earnings estimates for 2025 and four have raised the same for 2026 in the past seven days. The Zacks Consensus Estimate for 2025 and 2026 earnings has moved 1.1% and 0.4% north, respectively, in the same time frame.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for Progressive’s 2025 earnings per share indicates an increase of 17.6% on 16.7% higher revenues.  The consensus estimate for 2026 earnings per share indicates a 2.4% decline but a 10.5% increase in revenues.  The long-term earnings growth rate is pegged at 9.8%, better than the industry average of 6.8%. PGR has a Growth Score of A.Average Target Price for PGR Suggests Solid UpsideBased on short-term price targets offered by 18 analysts, the Zacks average price target is $303.89 per share. The average suggests a potential 17% 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 ResearchParting Thoughts on PGR StockProgressive boasts a robust market presence, a diverse range of products and services, and strong underwriting and operational capabilities. Favorable analyst sentiment, a consistent dividend history and a VGM Score of A further strengthen investor confidence in PGR.However, rising repair costs weigh on auto insurance margins. Given its 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.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant 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