PGR

We rate PROGRESSIVE CORP/OH/ (PGR) as Avoid with a composite score of 35.7/100 at a current price of $206.10. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in stability (66th percentile) and value (42th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (15th percentile) and quality (28th percentile) tempers our overall conviction. We assign a Narrow Moat rating (65/100), High uncertainty, and Standard capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

PROGRESSIVE CORP/OH/ holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 35.7/100 places it at rank #4032 in our full 7,333-stock universe. With a $144.7B market capitalization, PROGRESSIVE CORP/OH/ operates at meaningful scale within the Finance, Insurance, And Real Estate sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 24%, though momentum at the 15th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 0% (-76.5pp vs sector) narrow to operating margins of 15% (-1.8pp vs sector) and net margins of 12.6%, yielding a gross-to-net conversion rate of N/A%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $206.10, PROGRESSIVE CORP/OH/ is trading near fair value based on current fundamentals. Our value factor score of 42/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 11.2x (roughly in line with the sector median of 11.9x), EV/EBITDA of 8.8x (near the sector median), P/B of 3.4x, P/S of 1.4x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to PROGRESSIVE CORP/OH/. Key risk factors include significant leverage (243% debt-to-equity), weak quality scores (28th percentile), low beta of 0.27 — while defensive, this may indicate limited upside participation in bull markets. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (243% debt-to-equity); weak quality scores (28th percentile); low beta of 0.27 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 66th percentile and quality factor at the 28th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (66th percentile) suggests predictable business dynamics; large-cap scale ($144.7B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate PROGRESSIVE CORP/OH/'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 30.2%, and the balance sheet is managed within acceptable parameters (D/E: 243%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; PROGRESSIVE CORP/OH/ falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 1.98% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, PROGRESSIVE CORP/OH/ receives a Avoid rating with a composite score of 35.7/100 (rank #4032 of 7,333). Our quantitative framework assigns a Narrow Moat (65/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 36/100.

Our analysis does not support a constructive view on PROGRESSIVE CORP/OH/ at this time. The combination of the current quantitative profile, high uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.