Analyst Note| Brett Horn, CFA |
Progressive has enjoyed significant tailwinds over the past year, as the pandemic led to a reduction in miles driven and claims. The net result has been a trailing 12-month return on equity of 31% for the narrow-moat franchise. However, we view mean reversion as an inevitability as the pandemic subsides, and the second quarter offered evidence that this is starting to occur. We will maintain our $79 fair value estimate.