Progressive is the IBD Stock Of The Day as it rises in a buy zone after a pullback to test support. Robust earnings and the market rotation out of tech high-flyers have boosted shares of Progressive insurance stock to record highs.
In Q2, Berkshire Hathaway, the conglomerate led by Warren Buffett, got an earnings boost from its insurance business.
Insurance companies tend to benefit from higher interest rates. They also pushed through large pricing increases in recent years.
Insurance Stock Returns To Buy Zone
Shares of Progressive edged up 0.6% to 222.99, within a buy zone, on the stock market today.
The insurance stock initially cleared a 217.77 buy point on July 16. That breakout reversed, undercut the entry and pulled back to the 21-day exponential moving average. It dropped for a quick test of support at its 50-day line, then rebounded to retake the 217.77 entry.
Choppy, uncertain market action means any stock purchases for the time being carry an elevated element of risk.
Progressive's prior flat base was only 8% deep, a sign that shares have been trading very tightly.
The relative strength line for the insurance stock is rising but remains below April's decade-plus high. The RS line, the blue line in the chart shown, rallied sharply between July 2023 and April 2024. Investors digested Progressive's robust comeback from several quarters of earnings declines.
Among other favorable technical signs, Progressive stock shows an up/down volume ratio of 1.2. It holds an Accumulation/Distribution Rating of B-, but fund ownership of shares has risen for three quarters, according to IBD Stock Checkup.
This insurance stock shows a 92 Relative Strength Rating out of a best-possible 99. The RS Rating means that Progressive has outperformed 92% of all stocks in IBD's database over the past year. Year to date, PGR stock has soared nearly 40% on the back of a big Q1 surge.
Progressive Earnings, Key Metric Improves
Shares of Progressive boast a 97 Composite Rating out of 99. The Composite Rating combines various technical and fundamental metrics into one easy-to-read score. The insurance stock bears a solid-enough 82 EPS Rating.
Progressive rang in earnings growth ranging from 99% to 474% in each of the past four quarters. That reflected easy comparisons in part.
For Q2, Progressive disclosed a 365% EPS jump to $2.65, smashing analyst estimates. The earnings boost reflected a 22% jump in net premiums written.
Its combined ratio fell by 8.5 percentage points vs. Q2 2023. The combined ratio, a profitability metric, measures the money flowing out of an insurance company in the form of dividends, expenses and losses.
Progressive Insurance Outlook
Progressive offers vehicle, boat and homeowners insurance.
For the full year, analysts expect Progressive to nearly double its earnings per share. That would follow a 50% jump in 2023, which saw a strong second half of the year more than offset first-half declines.
They see combined ratio for the full year at 90.45%, improving from 94.90% in 2023, because of price increases. That would put the key profit metric back in line with the 2018 level, which was Progressive's best result in more than a decade.
In 2021, Progressive earnings collapsed 51%. The auto industry grappled with lockdowns and quarantines due to the coronavirus pandemic, as well as a dramatic decline in miles driven. Many of those headwinds have now eased.
Progressive stock still holds a 49% gain from its breakout off a cuplike base last October. The insurance stock rode its 10-week moving average higher through April without forming any new bases. It successfully tested that level in May and July, and again in August.
