On Apr 7, 2016, we issued an updated research report on The Travelers Companies, Inc.TRV .
The property and casualty insurer (P&C) remains focused on implementing pricing actions to increase returns. Successful execution of pricing actions should enable the company to effectively revamp its portfolio with better performing classes of business.
The company has grown inorganically on the back of prudent mergers and acquisitions. Travelers' solid financial strength and flexibility facilitate strategic acquisitions to ramp up its growth profile in the near term.
Travelers displays robust capital management. The insurer regularly returns excess capital to shareholders via dividend increases and share buybacks. The year 2015 was also no exception as the company rewarded its shareholders with nearly $4 billion in capital. Moreover, the company generates strong cash flow and has solid holding company liquidity. It is also diligently working toward improving leverage ratios.
However, exposure to catastrophe losses continues to remain a concern as it adversely affects the underwriting results of the company. Moreover, a low interest rate environment had a negative impact on the company's investment income.
Travelers is set to report first-quarter 2016 results on Apr 21. The Zacks Consensus Estimate for the same is currently pegged at $2.55 per share, which translates to a year-over-year growth of 0.75%. Notably, Travelers has outperformed expectation for the three straight quarters with an average beat of 19.5%.
Our proven model shows that the company is likely to beat earnings this season too because it has the perfect combination of two key ingredients. The company holds a Zacks Rank #2 (Buy) and has a +5.10% Earnings ESP , which makes us reasonably confident of a positive earnings beat.
Other Stocks that Warrant a Look
Other well-placed stocks from the P&C insurers include Hallmark Financial Services Inc. HALL , Markel Corp. MKL and White Mountains Insurance Group, Ltd. WTM . Each of these stocks sports a Zacks Rank #1 (Strong Buy).