On Mar 20, 2013, the shares of
The Travelers Companies, Inc.
) hit a 52-week high of $84.10. Previously, the company generated
a 500% earnings surprise in the fourth quarter of 2012. The
company generated positive earning surprise in 6 out of the past
Travelers reported operating earnings of 72 cents per share in
the fourth quarter of 2012, which surpassed the Zacks Consensus
Estimate of 4 cents. Net written premiums during the quarter were
$5.4 billion, up 2% year over year.
Total revenue also increased 2% year over year to $6.5
billion, driven by the augmentation in premiums earned and net
investment income. Revenues surpassed the Zacks Consensus
Estimate of $6.3 billion.
Moreover, over the last 8 years, Travelers continuously
registered better returns on equity (ROE) than its peers.
Further, the company's dividend yield averaged 2.58% over the
last five years, much ahead of the industry yield of 0.96%.
Travelers also has a strong balance sheet with ample statutory
surplus levels. Moreover, the company is the second-largest
writer of auto and homeowners' insurance through independent
agents and the sixth-largest writer of commercial U.S.
The valuation of Travelers looks attractive. The shares are
trading at a discount to peers both on price-to-book and forward
price-to-earnings basis, while the return on equity of 9.6% is
higher than the peer group average of 9.3%.
Travelers carries a Zacks Rank #2 (Buy). Other property &
casualty insurance companies worth considering are
Arch Capital Group Ltd.
Aspen Insurance Holdings Ltd.
Cincinnati Financial Corp.
). All these companies carry a Zacks Rank #1 (Strong Buy).
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