Analyst Note| Brett Horn, CFA |
Progressive’s first quarter results were quite strong in an absolute sense. Over the past year, Progressive and its peers have enjoyed abnormal levels of profitability due to the pandemic and a reduction in miles driven. The trailing 12-month ROE of 39% is impressive, even for a narrow moat franchise like Progressive, which has consistently generated solid excess returns. But we expect mean reversion and there were some signs in the quarter that this is starting to occur. We will maintain our $75 fair value estimate.