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Is Travelers (TRV) Stock Worth Adding to Your Portfolio?
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Shares of The Travelers Companies, Inc. (TRV - Free Report) have gained momentum recently. Is it time to add the Zacks Rank #3 (Hold) property and casualty insurer to your portfolio?
Factors to Consider
Travelers is anticipated to benefit from its strong market position and reap economies of scale. The insurer enjoys a strong market position as one of the leading writers of auto and homeowners’ insurance and commercial U.S. property-casualty insurance. Also, the company remains committed toward the implementation of pricing actions to continue increasing returns.
In addition, the property and casualty insurer’s inorganic growth story remains impressive. The company undertakes strategic buyouts to diversify operations and boost operational performance, which in turn, will accelerate its overall growth.
Moreover, the company has been generating sufficient capital to engage in shareholder-friendly moves. This apart, the company has a robust liquidity position and has been making efforts to improve leverage ratios.
Though shares of Travelers underperformed the Zacks-categorized Property and Casualty since its third quarter earnings release, we believe that the above-mentioned growth drivers will help the stock turn around. Investors should note that Travelers has returned more than the S&P 500. Also, 2016 estimates have been moving north over the last 60 days.
Notably, valuation at current level is attractive as the stock is currently trading at a forward P/E of 12, a 57.4% discount to the industry average of 28.2x. On a price-to-book basis, shares are trading at 1.3x compared with the industry average of 1.4x. Travelers has a trailing 12-month return on equity (ROE) of 12.1%, which is higher than the industry average of 7.0%.
The long-term expected earnings growth is pegged at 7.7%. Also, the price earnings growth ratio, which determines the relative trade-off between the price of a stock, the earnings generated per share, and the company's expected growth, is 1.53, better than the industry average of 1.97. Notably Travelers carries a VGM score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Alleghany Corporation deals with P&C reinsurance and insurance businesses in the U.S. and internationally. The company delivered positive surprises in three of the last four quarters with an average beat of 20.52%.
NMI Holdings offers private mortgage guaranty insurance services in the U.S. The company delivered positive surprises in all of the last four quarters with an average beat of 62.80%.
Arch Capital offers property, casualty, and mortgage insurance and reinsurance products worldwide. It delivered positive surprises in all of the last four quarters with an average beat of 9.27%.
Zacks’ Best Private Investment Ideas
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Is Travelers (TRV) Stock Worth Adding to Your Portfolio?
Shares of The Travelers Companies, Inc. (TRV - Free Report) have gained momentum recently. Is it time to add the Zacks Rank #3 (Hold) property and casualty insurer to your portfolio?
Factors to Consider
Travelers is anticipated to benefit from its strong market position and reap economies of scale. The insurer enjoys a strong market position as one of the leading writers of auto and homeowners’ insurance and commercial U.S. property-casualty insurance. Also, the company remains committed toward the implementation of pricing actions to continue increasing returns.
In addition, the property and casualty insurer’s inorganic growth story remains impressive. The company undertakes strategic buyouts to diversify operations and boost operational performance, which in turn, will accelerate its overall growth.
Moreover, the company has been generating sufficient capital to engage in shareholder-friendly moves. This apart, the company has a robust liquidity position and has been making efforts to improve leverage ratios.
Though shares of Travelers underperformed the Zacks-categorized Property and Casualty since its third quarter earnings release, we believe that the above-mentioned growth drivers will help the stock turn around. Investors should note that Travelers has returned more than the S&P 500. Also, 2016 estimates have been moving north over the last 60 days.
Notably, valuation at current level is attractive as the stock is currently trading at a forward P/E of 12, a 57.4% discount to the industry average of 28.2x. On a price-to-book basis, shares are trading at 1.3x compared with the industry average of 1.4x. Travelers has a trailing 12-month return on equity (ROE) of 12.1%, which is higher than the industry average of 7.0%.
The long-term expected earnings growth is pegged at 7.7%. Also, the price earnings growth ratio, which determines the relative trade-off between the price of a stock, the earnings generated per share, and the company's expected growth, is 1.53, better than the industry average of 1.97. Notably Travelers carries a VGM score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Stocks to Consider
Some better-ranked stocks from the same space include Alleghany Corporation , NMI Holdings, Inc. (NMIH - Free Report) and Arch Capital Group Ltd. (ACGL - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alleghany Corporation deals with P&C reinsurance and insurance businesses in the U.S. and internationally. The company delivered positive surprises in three of the last four quarters with an average beat of 20.52%.
NMI Holdings offers private mortgage guaranty insurance services in the U.S. The company delivered positive surprises in all of the last four quarters with an average beat of 62.80%.
Arch Capital offers property, casualty, and mortgage insurance and reinsurance products worldwide. It delivered positive surprises in all of the last four quarters with an average beat of 9.27%.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time? Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>