PGR
The Progressive Corporation
$199.51
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 2.2% below fair value
Bear
$204.00
+2.3%
ROTCE 20.0% → 4.00x TBV
Fair
$204.00
+2.3%
ROTCE 25.0% → 4.00x TBV
Bull
$204.00
+2.3%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (40.0%) vs. cost of equity (6.0%)
Implied Market Multiple
4.12x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $228.33 from 41 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $204.00 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly