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The Progressive Corporation (PGR) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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The Progressive Corporation (PGR)

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Intrinsic Value (DCF)

Current$203.52
→
Intrinsic$386.89
+90%
$255.38$386.89$648.45
Market implies 2% growth for 5 years
DCF analysis suggests PGR could have 90% upside at 16% growth — verify assumptions match your view.
At $204, the market prices in only 2% growth — below historical 16%, suggesting low expectations.
Range: Bear $255 → Bull $648. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →12%14%16%18%
8%$485$528$574$623
10%$328$357$387$419
12%$245$266$288$312
14%$194$210$228$246

Bull Case

  • Bull case ($648) offers 219% upside at 20% growth, 8% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (2%) ≤ historical CAGR (16%)

Bear Case

  • Bear case ($255) with 13% growth, 12% discount rate
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5-Year Net Income Projection

Year 1$9.88B
Year 2$11.50B
Year 3$13.40B
Year 4$15.60B
Year 5$18.17B
Terminal$287.95B

📐 Model Inputs

Growth Rate16.5%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$8.48BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses Net Income (FCF not meaningful for insurers). See FAQ below for full methodology.

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Frequently Asked Questions

Is PGR stock undervalued or overvalued?
🟢 UNDERVALUED

PGR trades at $203.52 vs. our DCF-derived intrinsic value of $364.42, implying +72% upside. At a 9.5% WACC and 16.5% projected FCF growth, the market appears to be underpricing the present value of PGR's future cash flows. The bear case ($240.44) still suggests upside, providing margin of safety.

What is PGR's intrinsic value?

Using a 5-year DCF model: Base FCF of $8.48B, projected at 16.5% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $6.75B net debt and dividing by 0.59B shares: Bear $240.44 | Base $364.42 | Bull $546.16. Current price $203.52 implies +72% to base case.

How is PGR's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 16.5% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($220.92B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.1x.