The Progressive Corporation (PGR): A Bull Case Theory 

We came across a bullish thesis on The Progressive Corporation on Value investing subreddit by OnTheStreetwithLou. In this article, we will summarize the bulls’ thesis on PGR. The Progressive Corporation’s share was trading at $228.76 as of December 2nd. PGR’s trailing and forward P/E were 12.50 and 14.24 respectively according to Yahoo Finance.

The Progressive Corporation operates as an insurance company in the United States. PGR presents an intriguing value opportunity despite being down over 7% year-to-date, even as U.S. equities broadly perform well. The company has demonstrated top-tier growth, leading its peers in revenue over the past decade and achieving a remarkable 24.4% compound annual growth rate in free cash flow. Progressive’s operational efficiency is notable, with its combined ratio consistently outperforming competitors, including Berkshire Hathaway’s Geico, reflecting superior underwriting and claims management.

The company’s innovation in usage-based insurance has created a significant data moat, allowing it to offer personalized premiums in a rapidly growing market. Progressive’s hybrid distribution model—blending direct-to-consumer sales with independent agents—targets both price-sensitive and service-oriented customers, providing a competitive edge over direct-only rivals. Scale advantages further enhance profitability, with lower underwriting expenses and market share gains supported by competitive pricing; September’s adjusted combined ratio improved to 86.5 from 93.4 the previous year.

However, short-term pressures have weighed on the stock. U.S. tariffs on imported vehicles and parts have increased claim costs, particularly affecting auto insurance, which constitutes 85% of PGR’s business. Florida-specific insurance reforms led to a $950 million policyholder credit, suppressing near-term earnings.

Despite these cyclical and regulatory headwinds, Progressive’s brand strength, innovative positioning, and consistent operational execution suggest the market may be overreacting. Valuation analysis using discounted cash flow and residual income models indicates that the stock is undervalued at current levels. Over the medium to long term, PGR’s combination of growth, efficiency, and strategic advantages positions it to recover and potentially deliver compelling upside for disciplined value investors.

Previously we covered a bullish thesis on The Progressive Corporation (PGR) by Charly AI in April 2025, which highlighted the company’s strong financial performance, technological innovation, and improved profitability. The stock has depreciated approximately by 12.14% since our coverage. The thesis still stands as Progressive’s operational efficiency and usage-based insurance innovation support long-term value. OnTheStreetwithLou shares a similar view but emphasizes short-term pressures and undervaluation.

The Progressive Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 99 hedge fund portfolios held PGR at the end of the second quarter which was 91 in the previous quarter. While we acknowledge the risk and potential of PGR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PGR and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.