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Can Travelers (TRV) Surprise Again? - Analyst Blog

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We expect property and casualty insurer The Travelers Companies, Inc. ( TRV ) to beat expectations when it reports fourth-quarter 2013 results on Jan 21, 2014.

Why a Likely Positive Surprise?

Our proven model shows that Travelers Companies is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP : Expected Surprise Prediction or Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.47%. This is noteworthy and a leading indicator of a likely positive earnings surprise.

Zacks Rank #2 (Buy) : Stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Stocks carrying a Zacks Rank #4 or 5 (Sell-rated stocks) going into an earnings announcement should never be considered, especially when the company is seeing negative estimate revisions.

The combination of a Zacks Rank #2 and an Earnings ESP of +0.47% makes us upbeat about a possible positive earnings beat by Travelers Companies on Jan 21.

What is Driving the Better-than-Expected Earnings?

With a wide array of product offerings, we believe Travelers Companies will continue to benefit from its strong market position and reap economies of scale. Its new lower cost, lower-priced Auto insurance product - Quantum 2.0 is expected to improve volumes at attractive returns going ahead.

Its inorganic growth story also looks impressive.

Favorable rate environment is also expected to aid results. Furthermore, the company's underwriting result should also benefit from a benign catastrophe environment.

Travelers Companies 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.

Its recent $5 billion share repurchase authorization is also expected to boost the bottom line.

Travelers Companies delivered positive surprises in the last four quarters with the highest surprise coming in at a whopping 500% in the fourth quarter of 2012. Higher underwriting margins and lower catastrophe losses has been aiding solid results at the company.

Other Stocks to Consider

Travelers Companies is not the only firm looking up this earnings season. We also expect earnings beats to come from these 3 industry peers:

Aspen Insurance Holdings Ltd . ( AHL ), earnings ESP of +8.49% and a Zacks Rank #1 (Strong Buy).

PartnerRe Ltd . ( PRE ), earnings ESP of +11.24% and a Zacks Rank #1 (Strong Buy).

Platinum Underwriters Holdings Ltd. ( PTP ), earnings ESP of +10.66% and a Zacks Rank #1 (Strong Buy).

ASPEN INS HLDGS (AHL): Free Stock Analysis Report

PARTNERRE LTD (PRE): Free Stock Analysis Report

PLATINUM UNDRWT (PTP): Free Stock Analysis Report

TRAVELERS COS (TRV): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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