The Progressive Corp (NYSE:PGR)

CAPS Rating: 4 out of 5

An insurance holding company which offers a number of personal and commercial property-casualty insurance products primarily related to motor vehicles.

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Member Avatar youngrealmoney (< 20) Submitted: 8/21/2014 12:17:05 PM : Outperform Start Price: $24.93 PGR Score: +3.83

bought 20 shares at 24.94
Market Cap ~14.76 billion
reasonable Net Income prediction per year ~1 billion

14.76 years till paid for

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Member Avatar TMFBwithbike (59.10) Submitted: 7/4/2014 9:27:17 PM : Outperform Start Price: $25.21 PGR Score: +1.84

Love this company and their Foolish approach to car insurance.

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Member Avatar ConwayCrow (37.08) Submitted: 5/28/2014 10:27:09 PM : Outperform Start Price: $25.34 PGR Score: -1.88

Consistent returns. Neglected by analysts. Continuing trend toward online traffic.

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Member Avatar TMFBuck (75.00) Submitted: 5/16/2014 2:33:07 PM : Outperform Start Price: $25.34 PGR Score: -4.43

A great business model that will continue to take market share in their market. This is a long term hold.

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Member Avatar SINOHAN (< 20) Submitted: 4/17/2014 5:58:43 PM : Outperform Start Price: $23.64 PGR Score: +2.51

Good Time

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Member Avatar mgelinas (52.87) Submitted: 4/16/2014 12:03:32 PM : Outperform Start Price: $23.98 PGR Score: +0.51

improved per share dividends, paying down debts, higher revenues

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Member Avatar jamesso (< 20) Submitted: 4/15/2014 3:47:38 PM : Outperform Start Price: $23.79 PGR Score: +2.02

Dividends plus low PE and personal friends who prefer PGR insurance and love their claims experience!

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Member Avatar MFBriguy (99.83) Submitted: 3/9/2014 9:20:05 PM : Outperform Start Price: $24.38 PGR Score: +0.01

IV Pick

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Member Avatar AnsgarJohn (98.11) Submitted: 1/24/2014 5:46:12 PM : Outperform Start Price: $23.41 PGR Score: -0.86

Progressive Insurance, nice cashflow

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Member Avatar TMFStockDraft13 (54.16) Submitted: 8/15/2013 4:20:41 PM : Outperform Start Price: $24.23 PGR Score: -13.49

Owner: Brendan Matthews

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Member Avatar TMFTailwind (82.53) Submitted: 7/9/2013 12:41:48 PM : Outperform Start Price: $25.05 PGR Score: -17.67

This auto insurer has shown impressive underwriting discipline and profitability over the years, gaining market share in the process. Now the 4th largest auto insurer in the US, PGR leverages the cost advantage of its direct sales model into higher profitability. A long-term focused management team, innovative products (Snapshot) and intellectual property, and data-driven decision making are all reasons why I like this company. Icing on the cake is the fact that PGR benefits from rising interest rates (consensus is that this is very likely in the medium term) via its float investments.

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Member Avatar EmotionalTrader (34.05) Submitted: 6/19/2012 6:57:02 PM : Underperform Start Price: $19.06 PGR Score: +11.34

Thumbs down until they stop running the "Flo" ads.

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Member Avatar JohnPFlaniganJr (< 20) Submitted: 5/3/2012 11:42:59 AM : Outperform Start Price: $19.78 PGR Score: -11.96

Smaller exposure to homeowner/storm claims should produce better results than competition.

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Member Avatar tommyboy1969 (30.14) Submitted: 5/4/2011 4:47:02 PM : Outperform Start Price: $19.30 PGR Score: -14.83

buying around the high, i believe it will go higher.. I hope....

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Member Avatar skippy333 (< 20) Submitted: 10/30/2010 12:00:11 PM : Outperform Start Price: $17.12 PGR Score: -9.39

Being a contrarian investor, I'm going with this industry leader, eventhough it just received a downgrade. Progressive, one of the best-managed auto insurers, enjoys a 15% return on equity.

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Member Avatar krabber (< 20) Submitted: 5/22/2010 1:38:01 PM : Outperform Start Price: $16.42 PGR Score: -26.48

they can change their pricing much faster than any other auto insurer, which will alow them to win as we head into inflationary environment

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Member Avatar Aneirin (64.77) Submitted: 12/3/2009 6:14:50 PM : Outperform Start Price: $13.85 PGR Score: +8.56

Good value and high cash flow. Up and coming in its industry.

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Member Avatar SequoiaStocks (88.28) Submitted: 9/18/2009 10:22:05 AM : Outperform Start Price: $14.07 PGR Score: -3.30

This account tracks the performance of the investment firm Ruane, Cunniff, and Goldfarb - the investment manager of Sequoia Fund.

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Member Avatar JtHExperimental (22.74) Submitted: 6/24/2009 12:08:36 AM : Outperform Start Price: $11.88 PGR Score: -4.82

This is a very untraditional Jakila The Hun pick. Not sure how it'll work out. This green thumb is based on my belief that Progressive has long-term advantages in the insurance business that will help them to succeed moving forward. See Navi Ragarajan's article comparing Progressive and Berkshire Hathaway subsidiary, GEICO, for a bit of an analysis on this:

http://seekingalpha.com/article/144346-geico-vs-progressive-selected-10-year-metrics

I also like the fact that Progressive has a very strong balance sheet that might *understate* to some degree their actual strength. Note that a very substantial chunk of PGR's total assets are tied up in investments (maybe 2/3 of total assets). Much of that was fixed maturity investments, but notice they also had fairly large equity holdings that are probably undervalued on the books over the long term since the market is overly beaten down right now (and was even more beaten down on 3/31/09; the date of their last 10-Q). I came up with a current book value of around $6.30 per share for PGR, but I could see how that could jump up to at least $7.00 - $8.00 in a better environment.

I am by no means an expert on the insurance industry, but earnings and cash flows have been relatively strong for PGR. For FY '07, they earned about $1.60 per share and in FY '06, they brought in earnings of $2.10 per share. PGR technically turned a 10 cent per share loss for FY '08, but it's deceiving because most of that comes from a $1.45 billion realized loss on equity securities. That's not going to happen again moving forward. If you ignore that one item, they had earnings of $2.01 per share for FY '08. For the most recent quarter, they had earnings of 35 cents per share, as well.

It's difficult for me to come up with some form of "normalized earnings" for PGR, but I'd wager to say that even if we played it on the conservative side, we could say around $1.40 per share. Using a 9.5% cost of capital (which might be high considering that their notes have paid out about 6% - 7% in interest traditionally), I come up with a valuation of $28 using the $1.40 figure with a 3% growth rate. If I up that to $1.65, it's closer to $31. At $2, it's closer to $36 per share. I'm going to go with the conservative $28 with a reasonable discount for uncertainty --- so let's say $24.

The stock is currently selling at $14.50 and given PGR's significant long-term advantages, it looks like a bargain for more conservative investors with a long-term timeframe. This is a nice position that appears to be undervalued, but that should continue to grow in the future. My only qualm is the one pointed out by SuperPicks --- PGR seems expensive compared to some of its competitors. That my be good enough reason to stick around and see if one can get a better price. If it were to drop back to $12 or $10, it would be an absolute steal. All the same, this is not a bad pick-up at $14.50.

In the sense that this is a "conservative growth pick" that might be "on the expensive side comparatively", this is a very un-Jakila The Hun like selection, but I occasionally make these types of picks.

Outperform over a 5-10 year time frame.

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Member Avatar TMFScarletGray (99.29) Submitted: 6/2/2009 11:53:58 PM : Outperform Start Price: $13.66 PGR Score: -25.12

P&C market is hardening.

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