On Apr 1, 2013, shares of
The Travelers Companies Inc.
) hit a 52-week high of $84.72. Previously, the company had
reported solid fourth-quarter results with a positive earnings
surprise of 500%. Travelers witnessed positive earnings surprises
in 3 out of 4 quarters in 2012, with an average beat of 140.74%.
Further the company has been delivering positive earnings
surprise for 6 out of last 10 quarters.
On Jan 22, Travelers reported fourth quarter 2012 operating
earnings of 72 cents, which surpassed the Zacks Consensus
Estimate of 12 cents. Net written premiums during the
quarter increased 2% year over year to $5.4 billion.
During the fourth quarter Travelers' top line also improved 2%
year over year to $6.5 billion. Results also exceeded the Zacks
Consensus Estimate by 3.2%. The improvement in revenues came on
the back of higher premiums earned and net investment income.
Travelers has a strong capital management policy. In 2012, the
company deployed $1.45 billion to repurchase 22.4 million shares.
Further, the company's dividend yield averaged 2.56% over the
last five years, much ahead of the industry yield of 1.08%.
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. property-casualty
EMC INSURANCE (EMCI): Free Stock Analysis
TRAVELERS COS (TRV): Free Stock Analysis
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We expect adequate share buybacks to bolster Travelers' bottom
line going forward. The overall long-term expected earnings
growth rate for this stock is 12.48%.
Valuation looks attractive for Travelers. The shares are trading
at a discount to the peer group average on a forward
price-to-earnings basis. On a price-to-book basis the shares are
trading in line with the peer group average. The return on
equity of the stock is 9.6%, higher than the peer group average
of 9.3%. The 1-year return from the stock is 41.81%, much above
S&P 500's return of 10.91%.
Travelers currently carries a Zacks Rank #2 (Buy). Other stocks
in this industry such as
Cincinnati Financial Corporation
EMC Insurance Group Inc.
Arch Capital Group Ltd.
) carry a favorable Zacks Rank #1 (Strong Buy) and appear