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Strength Seen in Hanover Insurance (THG): Can Its 4.8% Jump Turn into More Strength?

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Hanover Insurance Group (THG - Free Report) shares rallied 4.8% in the last trading session to close at $148. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 3.8% loss over the past four weeks.

Focus on pricing segmentation and mix management and emphasis on growth in target states, product lines and industry classes in the middle market bode well for THG.

Rate increases and the successful launch of TAP sales drive Commercial Lines revenues. Hanover Insurance believes that its market-leading capabilities, operating model and portfolio performance should allow it to benefit in the high-margin $105 billion small commercial market segment.

THG estimates to deliver the higher end of mid-single-digit net written premium growth in 2022 and a five-year CAGR of more than 7% to $7 billion as it expects to increase prices in both home and auto as well as improvement of 20 basis points in expense ratio in 2022 and continued invest in technology to upgrade the front-end capabilities.

This insurance company is expected to post quarterly earnings of $2.11 per share in its upcoming report, which represents a year-over-year change of -26%. Revenues are expected to be $1.36 billion, up 7.7% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Hanover Insurance, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on THG going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Hanover Insurance is part of the Zacks Insurance - Property and Casualty industry. Travelers (TRV - Free Report) , another stock in the same industry, closed the last trading session 4.4% higher at $166.72. TRV has returned -8.6% in the past month.

For Travelers, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $2.04. This represents a change of -40.9% from what the company reported a year ago. Travelers currently has a Zacks Rank of #2 (Buy).


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