The Progressive Corporation (PGR) — Valuation Snapshot

The Progressive Corporation (PGR) is a bank, insurer or other financial, and a free-cash-flow discounted-cash-flow (DCF) model is structurally the wrong lens for it: for these businesses debt and float are raw material, not financing. So we value it the way a bank is valued — on the return it earns on its book equity. Our bank model (justified price-to-book) puts it at about $431.39 a share, between $349.13 and $564.37 for a cost of equity one point either side of 6.7%, against $227.52 today. Every input is listed with its source. It is a model estimate, not a price target, and not investment advice.

On the numbers we do have, PGR trades at a recent price of $227.52, a market capitalisation of about $131,816,480,768, sitting 74% of the way up its 52-week range ($189.20–$241.02), on the NYSE.

The standard alternative to a DCF is relative valuation — comparing PGR's trading multiples against its direct industry peers. Here that gives P/E of 11.5× (in line with the peer median of 12.7×); Fwd P/E of 14.0× (richer than the peer median of 9.1×); P/B of 3.8× (richer than the peer median of 2.1×); P/S of 1.4× (in line with the peer median of 1.5×); Dividend yield of 0.2% (richer than the peer median of 1.7%). A cheaper multiple than peers can flag a discount or a market that expects weaker growth; it is a comparison, not a recommendation.

The asset, or book-value, lens is the classic tool for asset-heavy businesses and financials. PGR shows a price-to-book (P/B) of 3.82 and book value of $59.56 per share. Price-to-book compares the market price to the accounting net-asset value per share; below 1.0 can mean a discount to net assets or that the market is pricing in trouble — descriptive either way, never a buy signal on its own.

Finally, a price-based read — explicitly not a valuation. PGR is in an up-trend (price above both its 50- and 200-day averages), trading -5.6% from its 52-week high. Over the past year the stock is +4.7%. Moving-average trend and 52-week position describe where the stock has traded; they say nothing about what it is worth.

To be exact about what this page is not: we are not saying the numbers for PGR are unavailable. They are, and they are above. We are saying a discounted-cash-flow model is the wrong instrument for this kind of business, and publishing one anyway — because the inputs happen to exist — would be a precise answer to the wrong question. Refusing is the more useful answer, and it is the same rule we apply to every name in this category.