We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Travelers (TRV) Up 10% YTD: Can It Retain the Momentum?
Read MoreHide Full Article
Shares of The Travelers Companies, Inc. (TRV - Free Report) have gained 9.8% year to date outperforming the industry’s increase of 5.9%. The Finance sector and the Zacks S&P 500 composite decreased 2.1% and 8% respectively. With a market capitalization of $41.5 billion, the average volume of shares traded in the last three months was 1.5 million.
Strong renewal rate change, retention, increase in new business supported by a compelling portfolio and solid capital position continue to drive Travelers. This Zacks Rank #3 (Hold) leading provider of property-casualty insurance for auto, home and business has a solid track of beating earnings estimates in the trailing six quarters.
ROE for the trailing 12 months is 12.3%, comparing favorably with the industry’s 5.6%, reflecting its efficiency in utilizing shareholders’ fund. Sustained operational excellence helped generate double-digit core ROE in nine of the past 10 years, averaging 12.6%. Travelers aims to generate mid-teens core ROE over time.
Will the Bull Run Continue?
A compelling product portfolio of coverages across nine lines of business should continue to help Travelers maintain high levels of retention, improve pricing and increase new business while achieving a positive renewal premium change.
As written pricing outpaces the estimated loss trend, Travelers expects margin expansion in the commercial business segments to continue.
Higher returns from the non-fixed income portfolio have been driving investment income over the last four years amid a low-interest rate environment. Travelers expects after-tax net investment income from non-fixed income portfolio including earnings from short-term securities between $430 million and $440 million per quarter in 2022.
Being a P&C insurer, TRV is exposed to catastrophe events inducing volatility in underwriting profitability. However, the insurer has an active catastrophe reinsurance program, which lends support in absorbing losses.
Increased digitalization to drive productivity and efficiency continues across the insurance sector and Travelers is no exception. The insurer remains focused on digitizing the value chain, leveraging cloud technology and leaning into artificial intelligence, among others. TRV stated that scale, profitability and cash flow should help it invest more than $1 billion annually on technology.
Travelers has an impressive VGM Score of B. This style score rates stocks on their combined weighted styles, helping to identify those with the most attractive value, best growth, and momentum.
The Zacks Consensus Estimate for 2022 earnings has moved 2.9% north in the past 60 days, reflecting analyst optimism. The expected long-term earnings growth rate is pegged at 3.2%.
Solid Balance Sheet
Travelers maintains a conservative balance sheet among its peers. Th insurer remains focused on keeping the debt-to-capital ratio between 15 and 25 and has been increasing its book value for the past 10 years. TRV had $4 billion remaining under repurchase authorization at 2021 end.
Dividend History
Riding on a solid capital position, Travelers has been hiking dividends for the last 11 years. Dividends increased at a five-year CAGR of 7.5%. Its dividend yield of 2.1% appears attractive compared with the industry average of 0.3%, making it an attractive pick for yield-seeking investors.
The Zacks Consensus Estimate for Cincinnati Financial’s 2022 earnings has moved up 5.7% in the past 30 days. CINF delivered a four-quarter average earnings surprise of 38.48%.
The Zacks Consensus Estimate for Everest Re Group’s 2022 earnings of $33.44 per share indicates a year-over-year increase of 15.4% and has moved up 2% in the past 30 days. The expected long-term earnings growth rate is pegged at 10.8%. RE delivered a four-quarter average earnings surprise of 24.72%.
The Zacks Consensus Estimate for W.R. Berkley’s 2022 earnings of $5.30 per share indicates a year-over-year increase of 3.9% and has moved 0.8% higher in the past 30 days. WRB has delivered a four-quarter average earnings surprise of 27.5.%.
Shares of CINF, RE and WRB have gained 7.8%, 8.9% and 9.6%, respectively year to date.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Travelers (TRV) Up 10% YTD: Can It Retain the Momentum?
Shares of The Travelers Companies, Inc. (TRV - Free Report) have gained 9.8% year to date outperforming the industry’s increase of 5.9%. The Finance sector and the Zacks S&P 500 composite decreased 2.1% and 8% respectively. With a market capitalization of $41.5 billion, the average volume of shares traded in the last three months was 1.5 million.
Strong renewal rate change, retention, increase in new business supported by a compelling portfolio and solid capital position continue to drive Travelers. This Zacks Rank #3 (Hold) leading provider of property-casualty insurance for auto, home and business has a solid track of beating earnings estimates in the trailing six quarters.
ROE for the trailing 12 months is 12.3%, comparing favorably with the industry’s 5.6%, reflecting its efficiency in utilizing shareholders’ fund. Sustained operational excellence helped generate double-digit core ROE in nine of the past 10 years, averaging 12.6%. Travelers aims to generate mid-teens core ROE over time.
Will the Bull Run Continue?
A compelling product portfolio of coverages across nine lines of business should continue to help Travelers maintain high levels of retention, improve pricing and increase new business while achieving a positive renewal premium change.
As written pricing outpaces the estimated loss trend, Travelers expects margin expansion in the commercial business segments to continue.
Higher returns from the non-fixed income portfolio have been driving investment income over the last four years amid a low-interest rate environment. Travelers expects after-tax net investment income from non-fixed income portfolio including earnings from short-term securities between $430 million and $440 million per quarter in 2022.
Being a P&C insurer, TRV is exposed to catastrophe events inducing volatility in underwriting profitability. However, the insurer has an active catastrophe reinsurance program, which lends support in absorbing losses.
Increased digitalization to drive productivity and efficiency continues across the insurance sector and Travelers is no exception. The insurer remains focused on digitizing the value chain, leveraging cloud technology and leaning into artificial intelligence, among others. TRV stated that scale, profitability and cash flow should help it invest more than $1 billion annually on technology.
Travelers has an impressive VGM Score of B. This style score rates stocks on their combined weighted styles, helping to identify those with the most attractive value, best growth, and momentum.
The Zacks Consensus Estimate for 2022 earnings has moved 2.9% north in the past 60 days, reflecting analyst optimism. The expected long-term earnings growth rate is pegged at 3.2%.
Solid Balance Sheet
Travelers maintains a conservative balance sheet among its peers. Th insurer remains focused on keeping the debt-to-capital ratio between 15 and 25 and has been increasing its book value for the past 10 years. TRV had $4 billion remaining under repurchase authorization at 2021 end.
Dividend History
Riding on a solid capital position, Travelers has been hiking dividends for the last 11 years. Dividends increased at a five-year CAGR of 7.5%. Its dividend yield of 2.1% appears attractive compared with the industry average of 0.3%, making it an attractive pick for yield-seeking investors.
Stocks to Consider
Some better-ranked stocks from the same space include Cincinnati Financial Corporation (CINF - Free Report) , Everest Re Group and W.R. Berkley Corporation (WRB - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Cincinnati Financial’s 2022 earnings has moved up 5.7% in the past 30 days. CINF delivered a four-quarter average earnings surprise of 38.48%.
The Zacks Consensus Estimate for Everest Re Group’s 2022 earnings of $33.44 per share indicates a year-over-year increase of 15.4% and has moved up 2% in the past 30 days. The expected long-term earnings growth rate is pegged at 10.8%. RE delivered a four-quarter average earnings surprise of 24.72%.
The Zacks Consensus Estimate for W.R. Berkley’s 2022 earnings of $5.30 per share indicates a year-over-year increase of 3.9% and has moved 0.8% higher in the past 30 days. WRB has delivered a four-quarter average earnings surprise of 27.5.%.
Shares of CINF, RE and WRB have gained 7.8%, 8.9% and 9.6%, respectively year to date.