Key Points
Progressive is one of the largest property and casualty insurance companies, generally producing strong underwriting results.
The stock is down about 10% from its 52-week high and nearly 25% from its 2025 high, but it isn't exactly cheap.
Property and casualty insurer Progressive (NYSE: PGR) is probably best known for selling auto insurance. That's a highly competitive segment of the industry, but the company has proven its chops, reporting a strong combined ratio of 87.3% in the second quarter of 2026. Is the roughly 10% pullback from the 52-week high, and about 25% drawdown from 2025's peak, as of this writing, enough to make the stock a buy? Probably not if you are a value investor.
Progressive runs a profitable business
The combined ratio is a measure of profitability in the insurance sector, with numbers below 100% indicating that a company is earning more from premiums than it costs to support those premiums and cover claims. Progressive has a strong history of running its business well on this front. Basically, it is a good business. But paying too much for a good business can turn it into a bad investment, as Benjamin Graham was fond of saying (Graham notably helped train Warren Buffett).
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So the real question here is whether the drawdowns noted above were sufficient to make Progressive's valuation attractive. The answer there isn't clean cut. For example, the price-to-sales ratio of 1.4x is in the middle of the historical range of roughly 0.5x to 2.2x. If anything, the P/S ratio is kind of toward the high side. The same general story holds with the price-to-book ratio. So these two metrics hint at a stock that isn't expensive, but it also isn't trading at bargain-basement prices.
The price-to-earnings ratio is a bit more positive, with the 11.1x P/E toward the lower end of its historical range. And the average insurance company has a P/E ratio of around 11.8x, so this makes Progressive look reasonably priced. Only Progressive's P/B ratio is 3.7x compared to the industry average of 1.7x, so the broader industry comparison still isn't a clear-cut win.
Progressive is cheaper, but not cheap
All in, Progressive looks like a well-run company trading at a fair-to-slightly elevated valuation even after the recent drawdown. If you like owning industry leaders and don't mind paying full fare, it might interest you. And if you own it and are happy with how the business is performing, you should probably hold on to it. However, if you have a value bias, you'll probably want to keep Progressive on your wish list for now. History suggests that if you are patient, you can pick up this industry-leading car insurer at a more attractive valuation, given that it has experienced a couple of sell-offs in the 50% range since roughly the turn of the century.
Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.