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Here's Why You Should Add Travelers (TRV) to Your Kitty
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The Travelers Companies, Inc.’s (TRV - Free Report) strong renewal rate change, high retention, increase in new business and effective capital deployment along with favorable growth estimates make it a good investment choice.
Travelers has a decent surprise history, having surpassed estimates in the last six quarters.
Zacks Rank & Price Performance
Travelers currently carries a Zacks Rank #2 (Buy). Year to date, shares have gained 16.8%, outperforming the industry's increase of 15.9%. The Finance sector and the Zacks S&P 500 composite have lost 1.9% and 4.8%, respectively in the same time frame.
Image Source: Zacks Investment Research
Growth Projections
The Zacks Consensus Estimate for 2023 earnings is pegged at $14.62, up 12.6% on 5.3% higher revenues of $38.1 billion. The expected long term earnings growth is pegged at 3.2%
Return on Equity (ROE)
Travelers’ ROE for the trailing 12 months is 12.3%, comparing favorably with the industry’s 5.9% and reflecting the company’s efficiency in utilizing shareholders’ fund. TRV targets mid-teens ROE over the long term.
Estimate Revision
The Zacks Consensus Estimate 2023 earnings has moved a cent north in the past 60 days, reflecting analyst optimism.
Style Score
Travelers has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum.
TRV has a Value Score of A. This style score helps find the most attractive value stocks.
Back-tested results have shown that stocks with a favorable Style Score, when combined with a solid Zacks Rank are the best bets.
Business Tailwinds
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. An active catastrophe reinsurance program lends support in absorbing losses stemming from catastrophes.
As written pricing outpaces the estimated loss trend, Travelers expects margin expansion in the commercial business segments to continue.
Higher returns in the non-fixed income portfolio continue to drive investment results. Travelers expects net investment income from non-fixed income portfolio to be $430 million to $440 million quarterly in 2022. An increase in the interest rate and benefits of higher average levels of invested assets should help TRV achieve the target.
Travelers 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 in technology.
Sturdy Balance Sheet
Travelers maintains a conservative balance sheet among its peers. This leading provider of property-casualty insurance for auto, home and business 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.
Impressive Dividend History
Banking on operational excellence and a solid capital position, the insurer has increased its dividend 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.
Other Stocks to Consider
Some other top-ranked stocks from the finance sector are United Fire Group, Inc. (UFCS - Free Report) , Cincinnati Financial Corp. (CINF - Free Report) and Berkshire Hathaway Inc. (BRK.B - Free Report) . United Fire and Cincinnati Financial currently sport a Zacks Rank #1 (Strong Buy), whereas Berkshire Hathaway carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. Year to date, UFCS stock has rallied 34%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
The bottom line of Cincinnati Financial surpassed earnings estimates in each of the last four quarters, the average being 38.48%. Year to date, the insurer has rallied 19.4%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2023 earnings has moved 5.5% in the past 60 days and indicates a year-over-year increase of 6.6%
Berkshire’s earnings surpassed estimates in three of the last four quarters, missed in one, the average beat being 11.86%. Year to date, BRK.B has rallied 18%.
The Zacks Consensus Estimate for Berkshire’s 2022 and 2023 earnings indicates a rise of 6.1% and 11% year over year. The expected long-term earnings growth rate is pegged at 7%.
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Here's Why You Should Add Travelers (TRV) to Your Kitty
The Travelers Companies, Inc.’s (TRV - Free Report) strong renewal rate change, high retention, increase in new business and effective capital deployment along with favorable growth estimates make it a good investment choice.
Travelers has a decent surprise history, having surpassed estimates in the last six quarters.
Zacks Rank & Price Performance
Travelers currently carries a Zacks Rank #2 (Buy). Year to date, shares have gained 16.8%, outperforming the industry's increase of 15.9%. The Finance sector and the Zacks S&P 500 composite have lost 1.9% and 4.8%, respectively in the same time frame.
Image Source: Zacks Investment Research
Growth Projections
The Zacks Consensus Estimate for 2023 earnings is pegged at $14.62, up 12.6% on 5.3% higher revenues of $38.1 billion. The expected long term earnings growth is pegged at 3.2%
Return on Equity (ROE)
Travelers’ ROE for the trailing 12 months is 12.3%, comparing favorably with the industry’s 5.9% and reflecting the company’s efficiency in utilizing shareholders’ fund. TRV targets mid-teens ROE over the long term.
Estimate Revision
The Zacks Consensus Estimate 2023 earnings has moved a cent north in the past 60 days, reflecting analyst optimism.
Style Score
Travelers has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum.
TRV has a Value Score of A. This style score helps find the most attractive value stocks.
Back-tested results have shown that stocks with a favorable Style Score, when combined with a solid Zacks Rank are the best bets.
Business Tailwinds
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. An active catastrophe reinsurance program lends support in absorbing losses stemming from catastrophes.
As written pricing outpaces the estimated loss trend, Travelers expects margin expansion in the commercial business segments to continue.
Higher returns in the non-fixed income portfolio continue to drive investment results. Travelers expects net investment income from non-fixed income portfolio to be $430 million to $440 million quarterly in 2022. An increase in the interest rate and benefits of higher average levels of invested assets should help TRV achieve the target.
Travelers 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 in technology.
Sturdy Balance Sheet
Travelers maintains a conservative balance sheet among its peers. This leading provider of property-casualty insurance for auto, home and business 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.
Impressive Dividend History
Banking on operational excellence and a solid capital position, the insurer has increased its dividend 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.
Other Stocks to Consider
Some other top-ranked stocks from the finance sector are United Fire Group, Inc. (UFCS - Free Report) , Cincinnati Financial Corp. (CINF - Free Report) and Berkshire Hathaway Inc. (BRK.B - Free Report) . United Fire and Cincinnati Financial currently sport a Zacks Rank #1 (Strong Buy), whereas Berkshire Hathaway carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. Year to date, UFCS stock has rallied 34%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
The bottom line of Cincinnati Financial surpassed earnings estimates in each of the last four quarters, the average being 38.48%. Year to date, the insurer has rallied 19.4%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2023 earnings has moved 5.5% in the past 60 days and indicates a year-over-year increase of 6.6%
Berkshire’s earnings surpassed estimates in three of the last four quarters, missed in one, the average beat being 11.86%. Year to date, BRK.B has rallied 18%.
The Zacks Consensus Estimate for Berkshire’s 2022 and 2023 earnings indicates a rise of 6.1% and 11% year over year. The expected long-term earnings growth rate is pegged at 7%.