Summary: ON SALE
Score: 17/20
MOS: 76%
Share Price: $91
Sticker Price: $392
Is Progressive a good buy?
Progressive is one of the largest auto insurance companies in the US. They also sell homeowners insurance, specialty insurance (motorcycles, boats, and RVs), and renters insurance. Progressive was founded in 1937 and is based out of Mayfield Village, OH.
In 1990, Progressive was the first insurance company to offer 24/7 claims reporting. In 1995, Progressive was the first insurance company to sell auto insurance online.
Today, Progressive is still one of the most intuitive insurance platforms online. Their technology and ease-of-use has set the bar for other insurance companies to strive for. Due to their advancement in technology, they actually do not have insurance agents like you see with Farmers, Allstate, and Statefarm. Progressive’s products are sold directly through the website or through independent insurance agents. Typically, large insurance companies like Farmers, Allstate, and Statefarm pay salaries to get agents started. These salaries increase the expenses significantly. As for Progressive, selling through independent agents means that agents are commission only. This lowers the expenses and risk for Progressive.
I like insurance companies because of two main reasons…
- Insurance is mandated by law for homeowners insurance and auto insurance (in most states). In other words, it’s not a want, it’s a need.
- Insurance is a recurring revenue business model. Customers make payments monthly, quarterly, or annually. This creates a steady stream of cash flow for the insurance company.
Yahoo Finance recently published an article talking about Progressive’s strong ROE (Return on Equity) which is very similar to the ROIC (Return on Investment Capital) you see within Tykr. Tykr has the Progressive ROIC scored a 6/6 which shows they are VERY effective at using capital to generate returns. This is important for investors like us. We need to see a business allocating it’s capital to profitable investments.
When you look at the total score, the 17/20 shows that Progressive has very strong financials. In fact, they are ranked #9 on the TOP 50 ON SALE within Tykr. In other words, they are a very low risk investment. Also, the share price of $91 vs the sticker price of $392 shows this stock has a lot of upside potential!
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The Summary, Score, and MOS of this stock may have changed since the posting of this review. Please login to Tykr to see up-to-date information.