Why Travelers is a Good Investment Pick - Analyst Blog

By
A A A

On Jun 3, Zacks Investment Research upgraded The Travelers Companies, Inc . ( TRV ) 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 repurchase authorization.

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 . ( AHL ), AmTrust Financial Services, Inc . ( AFSI ) and Atlas Financial Holdings, Inc . ( AFH ). All these stocks sport a Zacks Rank #1 (Strong Buy).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

TRAVELERS COS (TRV): Free Stock Analysis Report

AMTRUST FIN SVC (AFSI): Free Stock Analysis Report

ATLAS FINL HLDG (AFH): Free Stock Analysis Report

ASPEN INS HLDGS (AHL): Free Stock Analysis Report

To read this article on Zacks.com click here.

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 , Stocks

Referenced Stocks: TRV , AFSI , AFH , AHL

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

48,099,947
  • $16.09 ▲ 0.50%
40,277,806
  • $102.50 ▲ 0.24%
40,236,499
  • $19.57 ▲ 2.35%
31,092,510
  • $49.75 ▲ 0.65%
30,795,218
  • $34.92 ▲ 0.78%
29,910,855
  • $3.63 ▲ 0.83%
24,019,154
  • $13.06 ▼ 0.38%
23,753,906
  • $74.82 ▲ 1.31%
As of 8/29/2014, 04:04 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com