On Jun 3, Zacks Investment Research upgraded
The Travelers Companies, Inc
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Travelers has been witnessing rising earnings estimates on the back
of strong first-quarter 2014 results. Moreover, this property and
casualty insurer delivered positive earnings surprises in the last
4 quarters with an average beat of 28.73%.
Travelers reported first-quarter operating net earnings of $2.95 a
share, outperforming the Zacks Consensus Estimate by 38.5% and
improving 28% from the year-ago earnings. Higher net investment
income and net favorable prior-year reserve development led to the
upside. Lower share count attributable to continued buybacks
also boosted the bottom line. The last quarter also witnessed
written rate gains exceeding expected loss cost trends in all
segments. The company also experienced a high retention rate,
pricing gains and positive renewal rate changes.
With its efforts to reduce operating expenses and acquisition
costs, Travelers expects to realize savings of $140 million in
2015. This in turn is expected to drive margins higher.
Travelers also remains committed to enhance its shareholders' value
via dividend increase and share buyback. Travelers returned $882
million to its shareholders in the first quarter. In addition, the
board of directors of Travelers approved a dividend hike of 10%.
The insurer also has $4.109 billion remaining under its share
Travelers also scores strongly with the credit rating agencies.
Strong results prompted upward revisions in Zacks Consensus
Estimate for 2014 and 2015 as 15 of 17 estimates moved north over
the last 60 days. It is currently pegged at $9.11 (up 11.2%) for
2014 and $8.93 (up 4%) for 2015. The expected long-term growth rate
for the stock is 7.7%.
Other Stocks to Consider
Investors interested in the property and casualty industry may also
consider stocks like
Aspen Insurance Holdings Ltd
AmTrust Financial Services, Inc
Atlas Financial Holdings, Inc
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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