After faring well for multiple years, shares of property and casualty insurance major Progressive (NYSE:PGR) slid dramatically through the second half of 2025, bringing the trailing 12-month returns to -17.6 percent. Though historically fairly safe, insurance businesses like Progressive are looking unusually risky in today’s market due to multiple headwinds facing the industry. Is Progressive a good stock to own now, or could the wait for a recovery be too long to make PGR attractive?
Increasing Claims Hurting Bottom Line?
In looking at Progressive or other insurance stocks, it’s important to understand the difficulties that the insurance industry is facing. One culprit is the increasing prevalence of claims from weather events, which can put large costs on home and auto insurers like Progressive. General inflation has also affected insurance businesses.
While not directly affected by trade, insurers are also facing their own set of challenges from America’s drastic changes in tariff policy over the last year. By pushing up the costs of parts and construction materials, tariffs have negatively impacted the margins insurers receive from home and auto policies. Like many industries, the insurance industry is awaiting a Supreme Court decision that could remove at least some of the tariffs that were implemented by executive authority in 2025. On the commercial side of the insurance business, growing trade and geopolitical uncertainty introduce higher levels of risk than have been typical throughout most of the last few decades.
Some of these forces can be seen in Progressive’s own recent financial results. The monthly report for November of 2025 showed an 11 percent increase in net premiums written and an even stronger 14 percent increase in net premiums earned compared to November of 2024. Despite this growth in premiums, net income moved in the opposite direction, dropping by 5 percent year-over-year. It’s also worth noting that Progressive’s growth rate slowed considerably throughout last year, as the results for January of 2025 showed an 18 percent increase in premiums written and a 22 percent increase in premiums earned.
Where Is Progressive Headed Long-term?
Although Progressive is currently experiencing some headwinds along with the rest of the insurance industry, it’s worth noting that the business has performed quite well over many years. As of the quarterly reporting for Q3, Progressive was sitting on a 13-quarter streak of revenue growth and an 11-quarter streak of earnings growth. Between 2020 and the last 12 reported months, revenues rose from less than $50 billion to over $85 billion, while net income soared from $4.4 billion to $13.8 billion during the same period.
Despite investor skepticism, analysts are still expecting Progressive to maintain an EPS growth rate of about 10 percent through the next few years. While this rate of earnings growth is far lower than what Progressive was able to deliver even as recently as a year ago, it does seem likely that earnings will keep moving gradually upward over time. These expectations, however, are contingent on macroeconomic and other factors that are largely beyond Progressive’s control.
Is PGR Undervalued?
At 11.1 times earnings and 1.4 times sales, Progressive is trading somewhat below the respective sector averages of 12.3 and 1.8. Though comparable to the P/Es seen in the mid-2010s, the current premium to earnings is significantly lower than where PGR has typically traded throughout the 2020s. While PGR typically trades at a fairly modest P/S ratio, the ratio is currently lower than what has prevailed since the second half of 2023.
Analyst price forecasts suggest that Progressive could have quite a lot of upside in it at today’s prices. The range of target prices for PGR runs from a low of $191 to a high of $328, with the consensus target at $248.98. With shares currently trading at $202.37, the lowest price target would only see PGR lose another 5.6 percent. The consensus target, meanwhile, would imply a gain of 23 percent. Even so, 14 of the 19 analysts covering the stock rate it as a hold, while only four rate it as a buy.
PGR’s Dividend Worth It?
While Progressive does pay a dividend, its distribution works somewhat differently than what most investors are used to from dividend stocks. Progressive pays a standard quarterly dividend, currently standing at just $0.10 per share. This quarterly dividend, though, can be supplemented with a much larger special annual dividend, the size of which is decided on each year by management. In December, Progressive announced that the annual dividend for 2025 would be $13.50 per share.
This makes PGR an interesting case as a dividend stock. The quarterly dividend, adding up to just $0.40 per share each year, gives it a minuscule yield. While the special dividend can raise the yield to very attractive levels, it’s nowhere near as predictable. For reference, management announced a special dividend of $0.75 at the end of 2023 and a $4.50 dividend at the end of 2024.
Is Progressive a Good Stock to Own?
Right now, Progressive and other property and casualty insurance businesses are facing challenging times. A combination of more claims and pressure on margins from inflation and tariffs has made Progressive less profitable and driven down its premium growth rates. Even so, earnings growth over the next few years is expected to remain basically positive, creating potential opportunities for a rebound in share prices.
Until the outlook for insurance businesses begins to firm up, PGR is likely a decent hold but may not be undervalued enough to be an active buy. Since the pressures that are acting on Progressive are ongoing, it could be a while before performance stabilizes and the market regains confidence in PGR. Though its dividend yield, counting the special dividend, was quite high in 2025, PGR may not be a sufficiently reliable dividend producer to be appealing as an income producer while investors wait for better times. PGR may, however, be a good stock to watch for better entry points, as an eventual turnaround could generate strong double-digit returns.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.