Intrinsic value of Progressive Corp - PGR

Previous Close

$46.02

  Intrinsic Value

$115.13

stock screener

  Rating & Target

str. buy

+150%

  Value-price divergence*

-31%

Previous close

$46.02

 
Intrinsic value

$115.13

 
Up/down potential

+150%

 
Rating

str. buy

 
Value-price divergence*

-31%

Our model is not good at valuating stocks of financial companies, such as PGR.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of PGR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 26.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  12.41
  13.50
  12.65
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.29
  7.96
  7.67
  7.40
  7.16
  6.94
  6.75
  6.58
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
Revenue, $m
  0
  26,578
  29,940
  33,499
  37,250
  41,189
  45,316
  49,629
  54,128
  58,815
  63,693
  68,765
  74,038
  79,517
  85,211
  91,128
  97,279
  103,676
  110,329
  117,253
  124,462
  131,971
  139,797
  147,957
  156,470
  165,354
  174,631
  184,322
  194,449
  205,036
  216,109
Variable operating expenses, $m
 
  23,968
  26,994
  30,197
  33,573
  37,119
  40,833
  44,715
  48,765
  52,983
  57,374
  61,894
  66,640
  71,572
  76,697
  82,023
  87,560
  93,317
  99,305
  105,537
  112,026
  118,785
  125,829
  133,174
  140,836
  148,833
  157,182
  165,905
  175,020
  184,550
  194,516
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  21,806
  23,968
  26,994
  30,197
  33,573
  37,119
  40,833
  44,715
  48,765
  52,983
  57,374
  61,894
  66,640
  71,572
  76,697
  82,023
  87,560
  93,317
  99,305
  105,537
  112,026
  118,785
  125,829
  133,174
  140,836
  148,833
  157,182
  165,905
  175,020
  184,550
  194,516
Operating income, $m
  1,612
  2,611
  2,947
  3,302
  3,677
  4,071
  4,483
  4,914
  5,363
  5,832
  6,319
  6,871
  7,398
  7,945
  8,514
  9,105
  9,720
  10,359
  11,024
  11,716
  12,436
  13,186
  13,968
  14,784
  15,634
  16,522
  17,449
  18,417
  19,429
  20,487
  21,593
EBITDA, $m
  1,811
  2,830
  3,188
  3,567
  3,967
  4,386
  4,826
  5,285
  5,764
  6,263
  6,782
  7,323
  7,884
  8,467
  9,074
  9,704
  10,359
  11,040
  11,749
  12,486
  13,253
  14,053
  14,886
  15,755
  16,662
  17,608
  18,596
  19,628
  20,706
  21,833
  23,013
Interest expense (income), $m
  134
  145
  302
  470
  648
  836
  1,033
  1,239
  1,455
  1,680
  1,914
  2,158
  2,412
  2,675
  2,949
  3,234
  3,530
  3,837
  4,157
  4,490
  4,836
  5,197
  5,572
  5,963
  6,371
  6,797
  7,241
  7,705
  8,190
  8,696
  9,226
Earnings before tax, $m
  1,471
  2,466
  2,645
  2,832
  3,029
  3,235
  3,450
  3,675
  3,909
  4,152
  4,405
  4,713
  4,986
  5,270
  5,565
  5,871
  6,190
  6,522
  6,867
  7,226
  7,600
  7,990
  8,396
  8,820
  9,263
  9,725
  10,207
  10,712
  11,239
  11,791
  12,368
Tax expense, $m
  414
  666
  714
  765
  818
  873
  932
  992
  1,055
  1,121
  1,189
  1,272
  1,346
  1,423
  1,503
  1,585
  1,671
  1,761
  1,854
  1,951
  2,052
  2,157
  2,267
  2,381
  2,501
  2,626
  2,756
  2,892
  3,035
  3,183
  3,339
Net income, $m
  1,031
  1,800
  1,931
  2,067
  2,211
  2,361
  2,519
  2,683
  2,853
  3,031
  3,216
  3,440
  3,640
  3,847
  4,062
  4,286
  4,519
  4,761
  5,013
  5,275
  5,548
  5,832
  6,129
  6,439
  6,762
  7,099
  7,451
  7,820
  8,205
  8,607
  9,028

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  33,428
  37,915
  42,711
  47,787
  53,138
  58,758
  64,645
  70,798
  77,216
  83,902
  90,860
  98,096
  105,617
  113,433
  121,556
  129,997
  138,772
  147,897
  157,388
  167,266
  177,549
  188,262
  199,426
  211,066
  223,210
  235,884
  249,117
  262,941
  277,388
  292,491
  308,287
Adjusted assets (=assets-cash), $m
  33,428
  37,915
  42,711
  47,787
  53,138
  58,758
  64,645
  70,798
  77,216
  83,902
  90,860
  98,096
  105,617
  113,433
  121,556
  129,997
  138,772
  147,897
  157,388
  167,266
  177,549
  188,262
  199,426
  211,066
  223,210
  235,884
  249,117
  262,941
  277,388
  292,491
  308,287
Revenue / Adjusted assets
  0.000
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
Average production assets, $m
  1,572
  1,781
  2,006
  2,244
  2,496
  2,760
  3,036
  3,325
  3,627
  3,941
  4,267
  4,607
  4,961
  5,328
  5,709
  6,106
  6,518
  6,946
  7,392
  7,856
  8,339
  8,842
  9,366
  9,913
  10,483
  11,079
  11,700
  12,350
  13,028
  13,737
  14,479
Working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total debt, $m
  3,148
  6,568
  10,223
  14,091
  18,168
  22,451
  26,937
  31,625
  36,515
  41,610
  46,912
  52,426
  58,157
  64,113
  70,303
  76,735
  83,422
  90,374
  97,607
  105,133
  112,970
  121,132
  129,639
  138,509
  147,763
  157,420
  167,504
  178,038
  189,046
  200,555
  212,591
Total liabilities, $m
  25,470
  28,891
  32,546
  36,414
  40,491
  44,774
  49,260
  53,948
  58,838
  63,933
  69,235
  74,749
  80,480
  86,436
  92,626
  99,058
  105,745
  112,697
  119,930
  127,456
  135,293
  143,455
  151,962
  160,832
  170,086
  179,743
  189,827
  200,361
  211,369
  222,878
  234,914
Total equity, $m
  7,957
  9,024
  10,165
  11,373
  12,647
  13,984
  15,386
  16,850
  18,377
  19,969
  21,625
  23,347
  25,137
  26,997
  28,930
  30,939
  33,028
  35,199
  37,458
  39,809
  42,257
  44,806
  47,463
  50,234
  53,124
  56,140
  59,290
  62,580
  66,018
  69,613
  73,372
Total liabilities and equity, $m
  33,427
  37,915
  42,711
  47,787
  53,138
  58,758
  64,646
  70,798
  77,215
  83,902
  90,860
  98,096
  105,617
  113,433
  121,556
  129,997
  138,773
  147,896
  157,388
  167,265
  177,550
  188,261
  199,425
  211,066
  223,210
  235,883
  249,117
  262,941
  277,387
  292,491
  308,286
Debt-to-equity ratio
  0.396
  0.730
  1.010
  1.240
  1.440
  1.610
  1.750
  1.880
  1.990
  2.080
  2.170
  2.250
  2.310
  2.370
  2.430
  2.480
  2.530
  2.570
  2.610
  2.640
  2.670
  2.700
  2.730
  2.760
  2.780
  2.800
  2.830
  2.840
  2.860
  2.880
  2.900
Adjusted equity ratio
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,031
  1,800
  1,931
  2,067
  2,211
  2,361
  2,519
  2,683
  2,853
  3,031
  3,216
  3,440
  3,640
  3,847
  4,062
  4,286
  4,519
  4,761
  5,013
  5,275
  5,548
  5,832
  6,129
  6,439
  6,762
  7,099
  7,451
  7,820
  8,205
  8,607
  9,028
Depreciation, amort., depletion, $m
  199
  219
  242
  265
  290
  315
  343
  371
  400
  431
  463
  452
  486
  522
  560
  599
  639
  681
  725
  770
  818
  867
  918
  972
  1,028
  1,086
  1,147
  1,211
  1,277
  1,347
  1,420
Funds from operations, $m
  2,671
  2,020
  2,172
  2,332
  2,501
  2,677
  2,861
  3,054
  3,254
  3,462
  3,679
  3,892
  4,126
  4,369
  4,622
  4,885
  5,158
  5,442
  5,737
  6,045
  6,365
  6,699
  7,047
  7,411
  7,790
  8,185
  8,598
  9,030
  9,482
  9,954
  10,448
Change in working capital, $m
  -31
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from operations, $m
  2,702
  2,020
  2,172
  2,332
  2,501
  2,677
  2,861
  3,054
  3,254
  3,462
  3,679
  3,892
  4,126
  4,369
  4,622
  4,885
  5,158
  5,442
  5,737
  6,045
  6,365
  6,699
  7,047
  7,411
  7,790
  8,185
  8,598
  9,030
  9,482
  9,954
  10,448
Maintenance CAPEX, $m
  0
  -154
  -175
  -197
  -220
  -245
  -271
  -298
  -326
  -356
  -386
  -418
  -452
  -486
  -522
  -560
  -599
  -639
  -681
  -725
  -770
  -818
  -867
  -918
  -972
  -1,028
  -1,086
  -1,147
  -1,211
  -1,277
  -1,347
New CAPEX, $m
  -215
  -209
  -225
  -238
  -251
  -264
  -276
  -289
  -301
  -314
  -327
  -340
  -353
  -367
  -381
  -396
  -412
  -429
  -446
  -464
  -483
  -503
  -524
  -547
  -570
  -595
  -622
  -649
  -679
  -709
  -742
Cash from investing activities, $m
  -2,465
  -363
  -400
  -435
  -471
  -509
  -547
  -587
  -627
  -670
  -713
  -758
  -805
  -853
  -903
  -956
  -1,011
  -1,068
  -1,127
  -1,189
  -1,253
  -1,321
  -1,391
  -1,465
  -1,542
  -1,623
  -1,708
  -1,796
  -1,890
  -1,986
  -2,089
Free cash flow, $m
  237
  1,656
  1,772
  1,897
  2,029
  2,168
  2,314
  2,467
  2,626
  2,793
  2,966
  3,134
  3,321
  3,516
  3,718
  3,929
  4,147
  4,374
  4,611
  4,856
  5,112
  5,379
  5,656
  5,946
  6,247
  6,562
  6,891
  7,234
  7,593
  7,967
  8,359
Issuance/(repayment) of debt, $m
  452
  3,420
  3,655
  3,868
  4,077
  4,283
  4,486
  4,688
  4,891
  5,095
  5,302
  5,514
  5,731
  5,956
  6,189
  6,432
  6,686
  6,953
  7,232
  7,527
  7,836
  8,163
  8,507
  8,870
  9,253
  9,657
  10,084
  10,534
  11,008
  11,509
  12,036
Issuance/(repurchase) of shares, $m
  -193
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  269
  3,420
  3,655
  3,868
  4,077
  4,283
  4,486
  4,688
  4,891
  5,095
  5,302
  5,514
  5,731
  5,956
  6,189
  6,432
  6,686
  6,953
  7,232
  7,527
  7,836
  8,163
  8,507
  8,870
  9,253
  9,657
  10,084
  10,534
  11,008
  11,509
  12,036
Total cash flow (excl. dividends), $m
  506
  5,076
  5,427
  5,765
  6,106
  6,451
  6,800
  7,155
  7,517
  7,887
  8,268
  8,648
  9,052
  9,472
  9,908
  10,361
  10,834
  11,327
  11,843
  12,383
  12,949
  13,541
  14,163
  14,816
  15,501
  16,220
  16,975
  17,768
  18,601
  19,476
  20,395
Retained Cash Flow (-), $m
  -668
  -1,067
  -1,142
  -1,208
  -1,273
  -1,338
  -1,401
  -1,464
  -1,528
  -1,591
  -1,656
  -1,722
  -1,790
  -1,860
  -1,933
  -2,009
  -2,088
  -2,172
  -2,259
  -2,351
  -2,448
  -2,550
  -2,657
  -2,770
  -2,890
  -3,016
  -3,150
  -3,290
  -3,438
  -3,595
  -3,759
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  4,010
  4,285
  4,557
  4,833
  5,113
  5,399
  5,691
  5,989
  6,296
  6,612
  6,925
  7,262
  7,612
  7,974
  8,352
  8,745
  9,155
  9,584
  10,032
  10,501
  10,992
  11,506
  12,045
  12,610
  13,203
  13,825
  14,478
  15,163
  15,881
  16,636
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  3,844
  3,923
  3,966
  3,979
  3,963
  3,918
  3,845
  3,744
  3,617
  3,466
  3,289
  3,099
  2,894
  2,677
  2,452
  2,222
  1,992
  1,765
  1,545
  1,334
  1,137
  955
  789
  642
  514
  403
  311
  235
  173
  125
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

The Progressive Corporation is an insurance holding company. The Company's insurance subsidiaries and affiliates provide personal and commercial automobile and property insurance, other specialty property-casualty insurance and related services. The Company operates through the Personal Lines, Commercial Lines and Property segments. The Company's Personal Lines segment writes insurance for personal autos, and recreational and other vehicles. The Commercial Lines business writes primary liability, physical damage and other auto-related insurance for automobiles and trucks owned and/or operated predominately by small businesses as a part of the commercial auto market. ASI is a homeowner carrier in the United States, which specializes in personal and commercial property insurance, personal umbrella insurance, and primary and excess flood insurance. The Company's service business includes Commercial Auto Insurance Procedures/Plans (CAIP) and Commission-based businesses.

FINANCIAL RATIOS  of  Progressive Corp (PGR)

Valuation Ratios
P/E Ratio 25.9
Price to Sales 1.1
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 9.9
Price to Free Cash Flow 10.7
Growth Rates
Sales Growth Rate 12.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 64.1%
Cap. Spend. - 3 Yr. Gr. Rate 9%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 39.6%
Total Debt to Equity 39.6%
Interest Coverage 12
Management Effectiveness
Return On Assets 3.6%
Ret/ On Assets - 3 Yr. Avg. 4.6%
Return On Total Capital 9.8%
Ret/ On T. Cap. - 3 Yr. Avg. 12.7%
Return On Equity 13.5%
Return On Equity - 3 Yr. Avg. 17%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 7.7%
EBITDA Margin - 3 Yr. Avg. 9.7%
Operating Margin 6.9%
Oper. Margin - 3 Yr. Avg. 9.1%
Pre-Tax Margin 6.3%
Pre-Tax Margin - 3 Yr. Avg. 8.4%
Net Profit Margin 4.4%
Net Profit Margin - 3 Yr. Avg. 5.7%
Effective Tax Rate 28.1%
Eff/ Tax Rate - 3 Yr. Avg. 31%
Payout Ratio 50.3%

PGR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PGR stock intrinsic value calculation we used $23417 million for the last fiscal year's total revenue generated by Progressive Corp. The default revenue input number comes from 2016 income statement of Progressive Corp. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PGR stock valuation model: a) initial revenue growth rate of 13.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for PGR is calculated based on our internal credit rating of Progressive Corp, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Progressive Corp.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PGR stock the variable cost ratio is equal to 90.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for PGR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.6% for Progressive Corp.

Corporate tax rate of 27% is the nominal tax rate for Progressive Corp. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PGR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PGR are equal to 6.7%.

Life of production assets of 10.2 years is the average useful life of capital assets used in Progressive Corp operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PGR is equal to 0%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $7957 million for Progressive Corp - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 582.645 million for Progressive Corp is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Progressive Corp at the current share price and the inputted number of shares is $26.8 billion.

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COMPANY NEWS

▶ Insurers Rally As Irma Damage Less Than Expected; 2 RV Makers Hit Buys   [Sep-11-17 04:21PM  Investor's Business Daily]
▶ Insurers rebound even as Irma barrels toward Florida   [Sep-08-17 06:38PM  Investing.com]
▶ 2 Top Dividend Stocks in Property Insurance   [Sep-04-17 04:29PM  Motley Fool]
▶ Weekly Wrap: All Eyes on Aftermath of Harvey   [Sep-02-17 06:00AM  Morningstar]
▶ How high will Hurricane Harvey damage go?   [10:46AM  Yahoo Finance Video]
▶ Tropical storm Harvey paralyzes Houston   [Aug-29-17 10:28AM  Yahoo Finance Video]
▶ Harvey hits Tampa Bay area insurance stocks   [07:20AM  American City Business Journals]
▶ Harvey Takes a Toll on Property-Insurance Stocks   [12:06AM  The Wall Street Journal]
▶ Property-Insurance Stocks Take Hit From Storm   [01:11PM  The Wall Street Journal]
▶ Insurance Stocks Tumble As Hurricane Harvey Impact Mounts   [11:22AM  Investor's Business Daily]
▶ Stock Futures Mixed As Houston Flooding Worsens   [08:03AM  Investor's Business Daily]
▶ Urban Outfitters and Agilent climb; Bristol-Myers skids   [Aug-16-17 04:48PM  Associated Press]
▶ Progressive Reports July 2017 Results   [08:17AM  GlobeNewswire]
▶ Five IQ100 members hit new highs   [Aug-09-17 01:29PM  CNBC Videos]
▶ ETFs with exposure to Progressive Corp. : August 1, 2017   [Aug-01-17 05:08PM  Capital Cube]
▶ Progressive Announces Investor Relations Conference Call   [Jul-27-17 04:35PM  GlobeNewswire]
▶ Jerome Dodson Comments on Progressive   [Jul-25-17 07:23PM  GuruFocus.com]
▶ Progressive Launches HomeQuote Explorer   [Jul-24-17 02:00PM  PR Newswire]
▶ Progressive Reports June 2017 Results   [08:02AM  GlobeNewswire]
▶ Forget Tesla, Buy These 4 Growth Stocks Instead   [Jul-07-17 12:20PM  Zacks]
▶ ETFs with exposure to Progressive Corp. : June 19, 2017   [Jun-19-17 03:55PM  Capital Cube]
▶ Two members hitting all-time highs   [Jun-15-17 01:23PM  CNBC Videos]
▶ Seven iQ100 members hit all-time highs   [Jun-14-17 03:48PM  CNBC Videos]
▶ Progressive Reports May 2017 Results   [08:39AM  GlobeNewswire]
▶ One member hitting a new all time high   [Jun-13-17 02:44PM  CNBC Videos]
▶ ETFs with exposure to Progressive Corp. : June 9, 2017   [Jun-09-17 01:51PM  Capital Cube]
▶ Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks   [May-18-17 02:38PM  Investor's Business Daily]
▶ Progressive Reports April 2017 Results   [May-17-17 08:35AM  GlobeNewswire]
▶ Progressive Corp. board OKs share buyback program   [May-12-17 04:55PM  MarketWatch]
▶ Progressive misses 1Q profit forecasts   [10:04AM  Associated Press]
▶ Progressive Reports March 2017 Results   [08:32AM  GlobeNewswire]
Financial statements of PGR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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