Can Travelers (TRV) Keep the Earnings Streak Alive? - Analyst Blog


We expect financial transaction service provider The Travelers Companies, Inc . ( TRV ) to beat expectations when it reports third-quarter 2013 results on Oct 22.

Why a Likely Positive Surprise?

Our proven model shows that Travelers Companies is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP : Expected Surprise Prediction or Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +8.29%. This is noteworthy and a leading indicator of a likely positive earnings surprise.

Zacks Rank #2 (Buy): Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. The sell-rated stocks (carrying a Zacks Rank #4 or 5) going into an earnings announcement should never be considered, especially when the company is seeing negative estimate revisions.  

The combination of a Zacks Rank # 2 (Buy) and Earnings ESP of +8.29% makes us anticipate a positive earnings beat by Travelers Companies on Oct 22.

What is Driving the Better-than-Expected Earnings?

With a wide array of product offerings, we believe Travelers Companies will continue to benefit from its strong market position and reap economies of scale. Favorable rate environment is also expected to aid results.

Its inorganic growth story also looks impressive.

Travelers Companies also remains focused on its efforts to reduce operating expenses and acquisition costs, in order to improve underwriting margins and introduce a more competitively priced product.  

Its share repurchase activity is also expected to boost the bottom line.

Travelers Companies delivered positive surprises in the last four quarters with the highest surprise coming at 500% in the fourth quarter of 2012. Higher underwriting margins and lower catastrophe losses in the first half of 2013 has been aiding solid results.

Other Stocks to Consider

Travelers Companies is not the only firm looking up this earnings season. We also expect earnings beats to come from these 3 industry peers:

Alleghany Corp. ( Y ), earnings ESP of +12.12% and a Zacks Rank #1 (Strong Buy).

The Hanover Insurance Group Inc . ( THG ), earnings ESP of +15.0% and a Zacks Rank #1 (Strong Buy).

The Chubb Corp. ( CB ), earnings ESP of +3.85% and a Zacks Rank #1 (Strong Buy).

CHUBB CORP (CB): Free Stock Analysis Report

HANOVER INSURAN (THG): Free Stock Analysis Report

TRAVELERS COS (TRV): Free Stock Analysis Report

ALLEGHANY CORP (Y): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CB , THG , TRV , Y

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