Progressive Corp. is the IBD Stock Of The Day as it breaks out to a new high. On Monday, Progressive insurance stock moved higher aided by a flight to safety and a peer's robust earnings report.
Warren Buffett-led Berkshire Hathaway reported robust Q4 earnings over the weekend. Berkshire's operating earnings surged 71% while its cash pile touched a record $334 billion. Berkshire Hathaway stock also broke out.
Seven analysts have hiked targets on PGR stock since its Jan. 29 earnings report, according to FactSet. No one has cut. Progressive's fourth-quarter report showed strong growth in an improving insurance market. The company is now benefiting from higher interest rates as well, analysts said.
On Monday, Raymond James analyst Gregory Peters maintained a $305 target on the outperform-rated insurance stock. "The company's long-term record of growth and value creation make it a core holding for large-cap growth investors," Peters said.
Progressive Insurance Stock Tests Buy Point
Shares of Progressive popped 2.5% to 272.84 in Monday's stock market action amid a broader decline. Progressive stock topped a 270.62 buy point from a cup base while making a 52-week high, according to MarketSurge charts. Shares remain above the 21-day exponential moving average as well as the longer-term averages after a four-week rally.
On Friday, Progressive stock dipped a fraction while stocks at large sold off sharply. Insurance stocks are considered defensive growth investments due to their relatively stable business models.
Progressive's relative strength line is nearing a new high. It's a bullish sign if the RS line, the blue line in the chart shown, hits a new high as a stock breaks out. A rising RS line shows a stock is outperforming vs. the S&P 500 index.
An 85 RS Rating means that this financial stock has outperformed 85% of all stocks in IBD's database over the past year.
Progressive Earnings And Outlook
The IBD Stock Checkup tool shows that PGR stock carries a Composite Rating of 92 out of a best-possible 99, the fourth highest in the insurance industry group. IBD's Composite Rating rolls various fundamental and technical metrics into one easy-to-use score.
Upstart home and auto insurance rival Root earned a spot on the IBD 50 list of top growth stocks. Other financial stocks changing the way Americans deal with money can also be found on the IBD 50 list, including Affirm and Robinhood Markets.
Progressive holds an EPS Rating of 76 out of a best-possible 99.
In the latest Q4, operating earnings-per-share growth slowed for a third consecutive quarter to a still-robust 32%, according to FactSet. But over the past three quarters, Progressive's earnings growth surged 170% on average. That is well above the three-year rate of 98%, according to the Stock Checkup tool.
For 2024 as a whole, Progressive more than doubled operating earnings per share to $14.04. Analysts expect a further 6% increase in 2025 and a 3.5% gain in 2026, FactSet shows.
'Stronger Growth And Profitability Than Peers'
Progressive is the second biggest personal auto insurer behind State Farm, with a roughly 14% share. It also underwrites home, personal and commercial insurance policies.
The auto insurance industry has been on a wild ride over the past several years, due in part to the pandemic's impact on travel. Of late, auto insurers have pushed through large pricing increases and underwriting results have improved as a result.
"Progressive's relatively early pricing response is now paying some dividends, with the company seeing stronger growth and profitability than peers," Morningstar analyst Brett Horn said on Jan. 29, after the company's Q4 results.
In Q4, net premiums written grew 20%. The combined ratio, a key profit metric, reached 87.9% vs. 88.7% a year ago (a number below 100 shows a company is doing very well and the lower the number, the better).
Policies in force (PIF) grew 18% in January, following solid Q4 gains, the company provides its fourth-quarter results on March 4.
On Monday, Raymond James analyst Peters said about Progressive: "We believe the near-term outlook includes industry-leading PIF growth and a better-than-target combined ratio."
Progressive anticipates $43 million of losses related to the January Los Angeles wildfires. But Peters said it has "the least exposure to the California wildfires in the group," including Allstate and Berkshire Hathaway's Geico insurance unit.
Over the past year, Progressive stock has surged 42.5%, including a 13.8% jump year to date.
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