Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

We expect The Travelers Companies, Inc. (TRV - Analyst Report) to beat expectations when it reports fourth-quarter and full year 2012 results on Jan 22.

Why a Likely Positive Surprise?

Our proven model shows that the property & casualty insurer is likely to beat earnings because it has the two key ingredients.

Positive Zacks ESP: Earnings ESP (Read: Zacks Earnings ESP: A Better Method) is at a whopping 550%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks #2 Rank (Buy): Note that stocks with Zacks Rank of #1, #2 and #3 have a significantly higher chance of beating earnings. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.  

The combination of Travelers’ Zacks Rank # 2 (Buy) and 550% ESP makes us expect a positive earnings beat on Jan 22nd.

What is Driving the Better Than Expected Earnings?

Travelers increased its stake in J. Malucelli Participações em Seguros e Resseguros S.A., a market leader in the surety insurance business in Brazil, to 49.5% from 43.4%.

It also made some useful investments to augment its technology platform. Further, the company announced its intentions to resume share repurchase activity. Additionally, it scores strongly with the rating agencies.

Together, all these factors are expected to lead to a positive earnings surprise in the upcoming quarter.

The positive trend is seen in the trailing four-quarter average surprise of 11.9%, which was greatly aided by the nearly 13% surprise in the last-reported quarter. Lower catastrophe losses and sturdy underwriting results fueled the outperformance.

However, after tax and after estimated recoveries from reinsurance loss of $650 million, stemming from Hurricane Sandy, might weigh on the results.

Other Stocks to Consider

Travelers is not the only firm looking up this earnings season. We also see likely earnings beats coming from these 3 industry peers:

AmTrust Financial Services, Inc. (AFSI - Snapshot Report), Earnings ESP of +13.1% and Zacks Rank #2 (Buy).

Berkshire Hathaway Inc. (BRK.A - Snapshot Report), Earnings ESP of +1.49% and Zacks Rank # 2 (Buy).

W.R. Berkley Corporation (WRB - Analyst Report), Earnings ESP of +6.25% and Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%