The Travelers Companies, Inc
) is set to report its first-quarter 2014 results on April 22.
Last quarter, the company posted a 23.5% positive earnings
surprise. Let's see how things are shaping up for this
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Growth Factors this Past Quarter
Travelers' results are expected to be largely aided by a benign
catastrophe environment, favoring a solid underwriting
performance. Favorable rate environment is also expected to
drive the upside.
Moreover, its new low-cost, lower-priced Auto insurance product -
Quantum 2.0 is expected to improve volumes at attractive returns
Travelers also remains focused on its efforts to reduce operating
expenses and acquisition costs, in order to improve underwriting
margins and introduce more competitively priced products.
The company's share repurchases, aimed at lowering the share
count, should also boost the bottom line.
However, a soft interest rate environment continues to be a drag
on the investment results.
Our proven model does not conclusively show that Travelers is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
: Travelers has a negative Zacks ESP. That is because the
Most Accurate estimate stands at $2.10 while the Zacks Consensus
Estimate is higher at $2.13. That leads to a difference of
: Travelers' Zacks Rank #3 (Hold) when combined with a negative
ESP makes surprise prediction difficult. We caution against
stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into
the earnings announcement, especially when the company is seeing
a negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this quarter:
Everest Re Group Ltd.
), earnings ESP of +9.78% and a Zacks Rank #2 (Buy).
RenaissanceRe Holdings Ltd
), earnings ESP of +9.52% and a Zacks Rank #1 (Strong Buy).
) earnings ESP of +1.41% and a Zacks Rank #2.