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Travelers (TRV) Up 15.2% in a Year: More Room for Growth?
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Shares of The Travelers Companies, Inc. (TRV - Free Report) have gained 15.2% in a year, outperforming the industry's increase of 4.7%. The Zacks S&P 500 composite decreased 15.6% in the said time frame. With a market capitalization of $43.7 billion, the average volume of shares traded in the last three months was 1.4 million.
Image Source: Zacks Investment Research The rally was largely driven by strong net earned premiums, high levels of retention, improved pricing and sufficient liquidity.
This Zacks Rank #3 (Hold) insurer has a solid track record of beating earnings estimates in each of the last seven quarters.
Travelers has a favorable VGM Score of A. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.
Will the Bull Run Continue?
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $14.68, indicating year-over-year increases of 11.4%.
Travelers’s return on equity for the trailing 12 months is 14.3%, up 220 basis points year over year, reflecting efficiency in utilizing shareholders’ fund.
Riding on strong net earned premiums and an aggregate underlying combined ratio for Business Insurance and Bond & Specialty Insurance, strong underwriting results continued in the commercial businesses. High levels of retention, improved pricing, an increase in new business and a positive renewal premium change should continue to drive Travelers.
TRV expects domestic automobile renewal premium change to be in double digits in the fourth quarter and be in the mid-teens throughout 2023.
Travelers raised the outlook for fixed income net investment income (NII), including earnings from short-term securities to be around $500 million after tax in the fourth quarter of 2022. TRV also projected nearly $540 million on average per quarter in 2023, with an estimated $515 million in the first quarter. Higher average levels of invested assets, reliable results from the fixed-income portfolio, and strong returns from the non-fixed-income portfolio are likely to drive the metric higher.
The Zacks Consensus Estimate for Travelers’s 2022 and 2023 revenues is pegged at $36.8 billion and $39.9 billion, indicating year-over-year increases of 6.1% and 8.7%, respectively.
The property and casualty insurer maintains a conservative balance sheet among its peers. The debt-to-capital ratio (excluding after-tax net unrealized investment gains included in shareholders’ equity) was within the insurer’s target range of 15% to 25%.
Travelers has an impressive dividend history, increasing its dividend for the last 18 years. Its current dividend yield of 1.9% is better than the industry average of 0.3%. This makes TRV an attractive pick for yield-seeking investors.
The Zacks Consensus Estimate for 2022 and 2023 has both moved 0.4% north in the past seven days. This should instill investors' confidence in the stock.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Kinsale Capital Group, Inc. (KNSL - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and Root, Inc. (ROOT - Free Report) . While Kinsale Capital sports a Zacks Rank #1 (Strong Buy), W.R. Berkley and Root carry Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital’s earnings surpassed estimates in all the last four quarters, the average being 15.16%. In the past year, Kinsale Capital has gained 26.2%.
The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings implies a respective year-over-year rise of 27.5% and 21.9%.
The bottom line of W.R. Berkley surpassed earnings estimates in each of the last four quarters, the average beat being 25.63%. In the past year, the insurer has gained 34.1%.
The Zacks Consensus Estimate for W.R. Berkley’s 2022 and 2023 earnings has moved 5.1% and 3.4% north, respectively, in the past 60 days.
Root delivered a trailing four-quarter average earnings surprise of 22.44%. In the past year, ROOT has lost 90.8%.
The Zacks Consensus Estimate for ROOT’s 2022 and 2023 earnings indicates a respective year-over-year increase of 44.7% and 23.9%.
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Travelers (TRV) Up 15.2% in a Year: More Room for Growth?
Shares of The Travelers Companies, Inc. (TRV - Free Report) have gained 15.2% in a year, outperforming the industry's increase of 4.7%. The Zacks S&P 500 composite decreased 15.6% in the said time frame. With a market capitalization of $43.7 billion, the average volume of shares traded in the last three months was 1.4 million.
Image Source: Zacks Investment Research
The rally was largely driven by strong net earned premiums, high levels of retention, improved pricing and sufficient liquidity.
This Zacks Rank #3 (Hold) insurer has a solid track record of beating earnings estimates in each of the last seven quarters.
Travelers has a favorable VGM Score of A. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.
Will the Bull Run Continue?
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $14.68, indicating year-over-year increases of 11.4%.
Travelers’s return on equity for the trailing 12 months is 14.3%, up 220 basis points year over year, reflecting efficiency in utilizing shareholders’ fund.
Riding on strong net earned premiums and an aggregate underlying combined ratio for Business Insurance and Bond & Specialty Insurance, strong underwriting results continued in the commercial businesses. High levels of retention, improved pricing, an increase in new business and a positive renewal premium change should continue to drive Travelers.
TRV expects domestic automobile renewal premium change to be in double digits in the fourth quarter and be in the mid-teens throughout 2023.
Travelers raised the outlook for fixed income net investment income (NII), including earnings from short-term securities to be around $500 million after tax in the fourth quarter of 2022. TRV also projected nearly $540 million on average per quarter in 2023, with an estimated $515 million in the first quarter. Higher average levels of invested assets, reliable results from the fixed-income portfolio, and strong returns from the non-fixed-income portfolio are likely to drive the metric higher.
The Zacks Consensus Estimate for Travelers’s 2022 and 2023 revenues is pegged at $36.8 billion and $39.9 billion, indicating year-over-year increases of 6.1% and 8.7%, respectively.
The property and casualty insurer maintains a conservative balance sheet among its peers. The debt-to-capital ratio (excluding after-tax net unrealized investment gains included in shareholders’ equity) was within the insurer’s target range of 15% to 25%.
Travelers has an impressive dividend history, increasing its dividend for the last 18 years. Its current dividend yield of 1.9% is better than the industry average of 0.3%. This makes TRV an attractive pick for yield-seeking investors.
The Zacks Consensus Estimate for 2022 and 2023 has both moved 0.4% north in the past seven days. This should instill investors' confidence in the stock.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Kinsale Capital Group, Inc. (KNSL - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and Root, Inc. (ROOT - Free Report) . While Kinsale Capital sports a Zacks Rank #1 (Strong Buy), W.R. Berkley and Root carry Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital’s earnings surpassed estimates in all the last four quarters, the average being 15.16%. In the past year, Kinsale Capital has gained 26.2%.
The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings implies a respective year-over-year rise of 27.5% and 21.9%.
The bottom line of W.R. Berkley surpassed earnings estimates in each of the last four quarters, the average beat being 25.63%. In the past year, the insurer has gained 34.1%.
The Zacks Consensus Estimate for W.R. Berkley’s 2022 and 2023 earnings has moved 5.1% and 3.4% north, respectively, in the past 60 days.
Root delivered a trailing four-quarter average earnings surprise of 22.44%. In the past year, ROOT has lost 90.8%.
The Zacks Consensus Estimate for ROOT’s 2022 and 2023 earnings indicates a respective year-over-year increase of 44.7% and 23.9%.