Lots of people are probably not interested in how an investment in shares of the Progressive (PGR -0.42%) insurance company has performed over time. They should be, though, because the stock has been a whopper of a performer.
If you'd plunked $1,000 in shares of Progressive 10 years ago, how would they have fared? Well, they would have averaged annual gains of 24% -- versus a solid 12.5% for the S&P 500 index. If you'd reinvested your dividends into additional shares of stock, your average annual gain would be 26%, versus 13.5% for the S&P 500. That 26% annual gain would have turned a $1,000 investment into around $10,073! (My colleague Courtney Carlsen has noted that if you'd invested $1,000 at the company's initial public offering (IPO) back in 1971, your stake would be worth close to $9 million.)
Image source: Getty Images.
Insurance certainly doesn't seem exciting, but it's something most people and business can't do without. That makes it fairly resistant to recessions -- and even to tariffs! And Progressive in particular has shown that it knows how to operate profitably, in part due to having a technological edge over many rivals. (It started using telematics to collect driver data some 15 years ago.)
Progressive has even outpaced GEICO, surpassing it in market share in 2023 -- and GEICO is owned by none other than Warren Buffett. (GEICO has been improving its profitability lately, but its growth rate leaves something to be desired.)
So if you didn't buy into Progressive a decade ago, should you buy into it now? Well, you would do well to at least add the company to your watch list. At recent levels, the stock seems a bit overvalued or undervalued, depending on which metric you look at. For example, its recent forward-looking price-to-earnings (P/E) ratio of 15 is below the five-year average of 19. Progressive pays a growing dividend, too, recently yielding 2%.
