PROG Holdings (PRG) Margin Stability At 6.5% Challenges Bearish Profitability Narratives

PROG Holdings (PRG) has just posted its FY 2025 third quarter results with revenue of $595.1 million and basic EPS of $0.83, set against a trailing twelve month revenue base of about $2.5 billion and EPS of $4.04. Over recent quarters the company has seen revenue move between $592.2 million and $684.1 million, while quarterly EPS has ranged from $0.79 to $1.99. This gives investors a clearer view of how earnings and sales have tracked into the current print. With a trailing net margin of 6.5% and last twelve month earnings shaped by a one off $180.5 million loss, the latest numbers put the spotlight firmly on how durable those margins are.

See our full analysis for PROG Holdings.

With the headline figures on the table, the next step is to see how they line up with the most widely held narratives around PROG Holdings, and where the numbers start to push back against those stories.

See what the community is saying about PROG Holdings

Margins steady at 6.5% on a smaller revenue base

• Over the last 12 months, PROG Holdings generated about US$2.5b of revenue with a 6.5% net margin, which is the same margin level as the prior year even though quarterly revenue has fluctuated between US$592.2 million and US$684.1 million.
• Consensus narrative expects revenue to grow by about 2.5% a year and profit margins to move from 8.5% to 5.2% over three years, which sits in tension with the current 6.5% trailing margin:
  • Analysts see earnings reaching US$141.4 million and EPS of US$4.21 by around 2028, compared with the current trailing EPS of US$4.04 and trailing net income of about US$163.9 million.
  • This means the market view is for modest revenue growth but lower profitability than the recent trailing margin, so you can use the current 6.5% level as a reference point when judging how conservative or optimistic those margin assumptions look to you.

Five year earnings slide versus a 3.5% uptick

• Trailing earnings growth over the last year is 3.5%, while the longer five year record shows earnings falling at about 8.6% a year, so the most recent period sits above that longer run trend but still within a history of pressure on profits.
• Bears focus on that multi year decline and softer demand in core leasing categories, and these results give them several talking points:
  • Revenue is expected to fall by roughly 2.7% a year over the next three years and the company is flagged as having an unstable dividend history and elevated debt, which fits the more cautious story about earnings quality and resilience.
  • On top of that, a one off loss of US$180.5 million in the last 12 months adds volatility to reported profitability, which critics can point to when they argue that the recent 3.5% earnings growth may not fully reflect underlying trends.

If you want to see how cautious investors connect these trends to their long term view, check out the detailed bear case for PROG Holdings: 🐻 PROG Holdings Bear Case

P/E of 8.7x with a DCF fair value above price

• At a share price of US$36.12, PROG Holdings trades on a P/E of 8.7x, slightly higher than the US Consumer Finance industry average of 8.2x but below a peer average of 9.3x, and below a DCF fair value estimate of about US$55.35, which implies the shares are roughly 34.7% under that DCF fair value.
• Bullish investors point to this gap along with tech and digital initiatives, and the current numbers give them some support as well as some pushback:
  • Support comes from the fact that trailing earnings are positive at roughly US$163.9 million and net margin is steady at 6.5%, which gives some basis for arguing that the current 8.7x P/E and the discount to DCF fair value could be appealing if those margins hold.
  • On the other hand, the same data set shows that earnings have declined at about 8.6% a year over five years and revenue is expected to contract by around 2.7% a year, so anyone leaning into the bullish view needs to be comfortable with paying for a story that assumes better use of technology and partnerships against that slower earnings profile.

Curious how optimists think the tech and BNPL story could justify that DCF gap and P/E? Take a look at the detailed bull case: 🐂 PROG Holdings Bull Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for PROG Holdings on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

If this mix of signals feels balanced between risk and opportunity, it may be a good time to review the numbers yourself and decide what stands out. Then look at 1 key reward and 3 important warning signs to see how other investors are weighing those trade offs.

See What Else Is Out There

PROG Holdings is working with a 6.5% net margin, a five year earnings slide, projected revenue contraction and flagged balance sheet concerns. Taken together, these factors raise questions about resilience.

If those pressures on profits and debt levels give you pause, compare this story with our solid balance sheet and fundamentals stocks screener (43 results) to quickly focus on companies built on sturdier financial footing.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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