Intrinsic value of Progressive Corp - PGR

Previous Close

$55.15

  Intrinsic Value

$122.97

stock screener

  Rating & Target

str. buy

+123%

Previous close

$55.15

 
Intrinsic value

$122.97

 
Up/down potential

+123%

 
Rating

str. buy

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 32.0

 

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
  14.40
  13.46
  12.61
  11.85
  11.17
  10.55
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.65
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.67
  5.61
  5.55
  5.49
  5.44
Revenue, $m
  0
  26,789
  30,395
  34,229
  38,286
  42,561
  47,052
  51,755
  56,670
  61,796
  67,136
  72,694
  78,473
  84,480
  90,722
  97,209
  103,951
  110,959
  118,247
  125,827
  133,716
  141,930
  150,487
  159,404
  168,702
  178,402
  188,526
  199,098
  210,141
  221,682
  233,747
Variable operating expenses, $m
 
  24,157
  27,403
  30,854
  34,505
  38,354
  42,395
  46,629
  51,052
  55,667
  60,473
  65,430
  70,632
  76,039
  81,657
  87,496
  93,565
  99,872
  106,432
  113,255
  120,356
  127,749
  135,450
  143,477
  151,846
  160,577
  169,689
  179,204
  189,144
  199,532
  210,392
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
  24,157
  27,403
  30,854
  34,505
  38,354
  42,395
  46,629
  51,052
  55,667
  60,473
  65,430
  70,632
  76,039
  81,657
  87,496
  93,565
  99,872
  106,432
  113,255
  120,356
  127,749
  135,450
  143,477
  151,846
  160,577
  169,689
  179,204
  189,144
  199,532
  210,392
Operating income, $m
  1,612
  2,632
  2,992
  3,375
  3,781
  4,208
  4,656
  5,126
  5,617
  6,130
  6,663
  7,263
  7,841
  8,441
  9,065
  9,713
  10,387
  11,087
  11,815
  12,572
  13,361
  14,181
  15,036
  15,927
  16,856
  17,826
  18,837
  19,893
  20,997
  22,150
  23,355
EBITDA, $m
  1,811
  2,853
  3,237
  3,645
  4,077
  4,532
  5,010
  5,511
  6,035
  6,580
  7,149
  7,741
  8,356
  8,996
  9,661
  10,351
  11,069
  11,816
  12,592
  13,399
  14,239
  15,114
  16,025
  16,974
  17,964
  18,997
  20,075
  21,201
  22,377
  23,606
  24,891
Interest expense (income), $m
  134
  145
  313
  493
  685
  888
  1,101
  1,326
  1,561
  1,807
  2,063
  2,330
  2,608
  2,897
  3,197
  3,510
  3,834
  4,171
  4,521
  4,886
  5,265
  5,659
  6,070
  6,498
  6,944
  7,409
  7,894
  8,400
  8,929
  9,481
  10,058
Earnings before tax, $m
  1,471
  2,487
  2,679
  2,882
  3,096
  3,320
  3,555
  3,800
  4,056
  4,323
  4,600
  4,933
  5,233
  5,544
  5,867
  6,203
  6,553
  6,916
  7,293
  7,687
  8,096
  8,522
  8,966
  9,429
  9,912
  10,417
  10,943
  11,493
  12,068
  12,669
  13,298
Tax expense, $m
  414
  671
  723
  778
  836
  896
  960
  1,026
  1,095
  1,167
  1,242
  1,332
  1,413
  1,497
  1,584
  1,675
  1,769
  1,867
  1,969
  2,075
  2,186
  2,301
  2,421
  2,546
  2,676
  2,813
  2,955
  3,103
  3,258
  3,421
  3,590
Net income, $m
  1,031
  1,815
  1,956
  2,104
  2,260
  2,424
  2,595
  2,774
  2,961
  3,156
  3,358
  3,601
  3,820
  4,047
  4,283
  4,528
  4,783
  5,049
  5,324
  5,611
  5,910
  6,221
  6,545
  6,883
  7,236
  7,604
  7,989
  8,390
  8,810
  9,248
  9,707

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
  38,215
  43,359
  48,829
  54,616
  60,715
  67,121
  73,830
  80,841
  88,154
  95,772
  103,700
  111,944
  120,513
  129,418
  138,672
  148,290
  158,287
  168,683
  179,497
  190,751
  202,468
  214,674
  227,395
  240,660
  254,497
  268,939
  284,020
  299,773
  316,236
  333,448
Adjusted assets (=assets-cash), $m
  33,428
  38,215
  43,359
  48,829
  54,616
  60,715
  67,121
  73,830
  80,841
  88,154
  95,772
  103,700
  111,944
  120,513
  129,418
  138,672
  148,290
  158,287
  168,683
  179,497
  190,751
  202,468
  214,674
  227,395
  240,660
  254,497
  268,939
  284,020
  299,773
  316,236
  333,448
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
  1,795
  2,036
  2,293
  2,565
  2,852
  3,152
  3,468
  3,797
  4,140
  4,498
  4,870
  5,258
  5,660
  6,078
  6,513
  6,965
  7,434
  7,923
  8,430
  8,959
  9,509
  10,083
  10,680
  11,303
  11,953
  12,631
  13,340
  14,079
  14,853
  15,661
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
  6,797
  10,717
  14,884
  19,294
  23,942
  28,823
  33,936
  39,278
  44,851
  50,656
  56,696
  62,978
  69,508
  76,294
  83,345
  90,674
  98,292
  106,213
  114,454
  123,029
  131,958
  141,259
  150,952
  161,060
  171,604
  182,609
  194,100
  206,104
  218,649
  231,765
Total liabilities, $m
  25,470
  29,120
  33,040
  37,207
  41,617
  46,265
  51,146
  56,259
  61,601
  67,174
  72,979
  79,019
  85,301
  91,831
  98,617
  105,668
  112,997
  120,615
  128,536
  136,777
  145,352
  154,281
  163,582
  173,275
  183,383
  193,927
  204,932
  216,423
  228,427
  240,972
  254,088
Total equity, $m
  7,957
  9,095
  10,320
  11,621
  12,999
  14,450
  15,975
  17,572
  19,240
  20,981
  22,794
  24,681
  26,643
  28,682
  30,802
  33,004
  35,293
  37,672
  40,147
  42,720
  45,399
  48,187
  51,092
  54,120
  57,277
  60,570
  64,008
  67,597
  71,346
  75,264
  79,361
Total liabilities and equity, $m
  33,427
  38,215
  43,360
  48,828
  54,616
  60,715
  67,121
  73,831
  80,841
  88,155
  95,773
  103,700
  111,944
  120,513
  129,419
  138,672
  148,290
  158,287
  168,683
  179,497
  190,751
  202,468
  214,674
  227,395
  240,660
  254,497
  268,940
  284,020
  299,773
  316,236
  333,449
Debt-to-equity ratio
  0.396
  0.750
  1.040
  1.280
  1.480
  1.660
  1.800
  1.930
  2.040
  2.140
  2.220
  2.300
  2.360
  2.420
  2.480
  2.530
  2.570
  2.610
  2.650
  2.680
  2.710
  2.740
  2.760
  2.790
  2.810
  2.830
  2.850
  2.870
  2.890
  2.910
  2.920
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
  1,815
  1,956
  2,104
  2,260
  2,424
  2,595
  2,774
  2,961
  3,156
  3,358
  3,601
  3,820
  4,047
  4,283
  4,528
  4,783
  5,049
  5,324
  5,611
  5,910
  6,221
  6,545
  6,883
  7,236
  7,604
  7,989
  8,390
  8,810
  9,248
  9,707
Depreciation, amort., depletion, $m
  199
  221
  245
  270
  296
  324
  354
  385
  417
  451
  486
  477
  515
  555
  596
  639
  683
  729
  777
  827
  878
  932
  988
  1,047
  1,108
  1,172
  1,238
  1,308
  1,380
  1,456
  1,535
Funds from operations, $m
  2,671
  2,036
  2,201
  2,374
  2,556
  2,748
  2,949
  3,159
  3,378
  3,606
  3,844
  4,079
  4,335
  4,602
  4,879
  5,167
  5,466
  5,777
  6,101
  6,438
  6,788
  7,153
  7,534
  7,930
  8,344
  8,776
  9,227
  9,698
  10,190
  10,705
  11,243
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
  2,036
  2,201
  2,374
  2,556
  2,748
  2,949
  3,159
  3,378
  3,606
  3,844
  4,079
  4,335
  4,602
  4,879
  5,167
  5,466
  5,777
  6,101
  6,438
  6,788
  7,153
  7,534
  7,930
  8,344
  8,776
  9,227
  9,698
  10,190
  10,705
  11,243
Maintenance CAPEX, $m
  0
  -154
  -176
  -200
  -225
  -251
  -280
  -309
  -340
  -372
  -406
  -441
  -477
  -515
  -555
  -596
  -639
  -683
  -729
  -777
  -827
  -878
  -932
  -988
  -1,047
  -1,108
  -1,172
  -1,238
  -1,308
  -1,380
  -1,456
New CAPEX, $m
  -215
  -223
  -242
  -257
  -272
  -286
  -301
  -315
  -329
  -343
  -358
  -372
  -387
  -402
  -418
  -435
  -452
  -470
  -488
  -508
  -529
  -550
  -573
  -597
  -623
  -650
  -678
  -708
  -740
  -773
  -808
Cash from investing activities, $m
  -2,465
  -377
  -418
  -457
  -497
  -537
  -581
  -624
  -669
  -715
  -764
  -813
  -864
  -917
  -973
  -1,031
  -1,091
  -1,153
  -1,217
  -1,285
  -1,356
  -1,428
  -1,505
  -1,585
  -1,670
  -1,758
  -1,850
  -1,946
  -2,048
  -2,153
  -2,264
Free cash flow, $m
  237
  1,659
  1,783
  1,917
  2,060
  2,210
  2,369
  2,535
  2,709
  2,891
  3,080
  3,265
  3,471
  3,684
  3,906
  4,136
  4,376
  4,625
  4,884
  5,153
  5,433
  5,725
  6,028
  6,345
  6,674
  7,018
  7,377
  7,751
  8,142
  8,551
  8,978
Issuance/(repayment) of debt, $m
  452
  3,649
  3,920
  4,168
  4,410
  4,648
  4,881
  5,112
  5,342
  5,573
  5,805
  6,041
  6,282
  6,530
  6,786
  7,052
  7,328
  7,618
  7,922
  8,240
  8,576
  8,929
  9,301
  9,693
  10,107
  10,544
  11,005
  11,491
  12,004
  12,545
  13,116
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
  3,649
  3,920
  4,168
  4,410
  4,648
  4,881
  5,112
  5,342
  5,573
  5,805
  6,041
  6,282
  6,530
  6,786
  7,052
  7,328
  7,618
  7,922
  8,240
  8,576
  8,929
  9,301
  9,693
  10,107
  10,544
  11,005
  11,491
  12,004
  12,545
  13,116
Total cash flow (excl. dividends), $m
  506
  5,308
  5,703
  6,085
  6,470
  6,858
  7,250
  7,647
  8,051
  8,463
  8,885
  9,306
  9,753
  10,214
  10,692
  11,188
  11,704
  12,243
  12,805
  13,393
  14,009
  14,653
  15,329
  16,038
  16,782
  17,562
  18,382
  19,243
  20,147
  21,096
  22,094
Retained Cash Flow (-), $m
  -668
  -1,138
  -1,224
  -1,302
  -1,377
  -1,452
  -1,525
  -1,597
  -1,669
  -1,741
  -1,813
  -1,887
  -1,962
  -2,039
  -2,119
  -2,202
  -2,289
  -2,379
  -2,474
  -2,574
  -2,678
  -2,789
  -2,905
  -3,028
  -3,157
  -3,293
  -3,437
  -3,589
  -3,749
  -3,918
  -4,096
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
 
  4,170
  4,478
  4,783
  5,092
  5,406
  5,725
  6,051
  6,383
  6,723
  7,072
  7,419
  7,791
  8,174
  8,572
  8,986
  9,416
  9,864
  10,331
  10,820
  11,330
  11,865
  12,424
  13,010
  13,625
  14,269
  14,945
  15,653
  16,397
  17,178
  17,997
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
 
  3,998
  4,100
  4,163
  4,193
  4,190
  4,155
  4,088
  3,989
  3,862
  3,708
  3,523
  3,324
  3,108
  2,878
  2,638
  2,393
  2,146
  1,903
  1,666
  1,440
  1,227
  1,031
  853
  694
  555
  436
  336
  254
  188
  136
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 31
Price to Sales 1.4
Price to Book 4
Price to Tangible Book
Price to Cash Flow 11.8
Price to Free Cash Flow 12.9
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 14.4% 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 581.067 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 $32.0 billion.

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COMPANY NEWS

▶ Progressive Reports October 2017 Results   [08:28AM  GlobeNewswire]
▶ Progressive Announces Investor Relations Conference Call   [Oct-27-17 09:13AM  GlobeNewswire]
▶ Is Progressive Corp Still a Buy After Its Earnings Report?   [Oct-19-17 12:01PM  InvestorPlace]
▶ ETFs with exposure to Progressive Corp. : October 9, 2017   [Oct-09-17 11:55AM  Capital Cube]
▶ Earnings Season Watch List: Progressive   [Oct-03-17 03:00AM  Investor's Business Daily]
▶ Bob Evans and Progressive rise; Rite Aid and Centene skid   [Sep-19-17 04:29PM  Associated Press]
▶ 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]
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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