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5 Reasons Why Travelers Stock Fits Your Portfolio to the Tee
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The Travelers Companies Inc. (TRV - Free Report) has seen the Zacks Consensus Estimate for 2018 and 2019 earnings being revised upward over the last 60 days. While current-year estimates moved 0.3% north, the consensus mark for 2019 was nudged up 0.4%. This upward estimate revision reflects analysts’ optimism in the stock.
Notably, the company is a leading provider of property-casualty insurance for auto, home and business.
Shares of this Zacks Rank #2 (Buy) property and casualty insurer have inched up 1.4% year to date, outperforming the industry’s gain of 1% and the S&P 500 index’s loss of 0.3%.
Travelers carries a favorable Value Score of B. Backtested results have shown that stocks with an impressive Value Score of A or B coupled with a bullish Zacks Rank offer best investment bets.
Let’s focus on some factors that make Travelers a lucrative stock for greater returns.
Improving Top line: The top line at Travelers increased nearly 18% since the financial downturn owing to higher net premium earned and rise in investment income. Factors such as a compelling product suit, improved scale, efficiencies, high retention rate, pricing gains, positive renewal rate changes will continue to drive premiums higher.
Increasing Investment Income: Investment income has been growing over the last few quarters. Higher private equity returns offset fixed income returns due to lower reinvestment rates. Recently, the Fed has hiked the rate to 1.75%, indicating two more raises in 2018 and three in 2019, reflecting a progressing economic backdrop. Given an improving rate environment, we expect the momentum to sustain. For 2018, Travelers anticipates about $25-$30 million of higher after-tax net investment income on a quarterly basis.
Strong Underlying Underwriting Margins Guided: Underlying underwriting margin is a measure to assess the performance of a company or its segments. On the back of inherent strengths, Travelers projects higher underlying underwriting margins in 2018 across its Business Insurance, Bond & Specialty Insurance and Personal Insurance than the recorded tally in 2017.
Effective Capital Management: A strong capital position helped Travelers hike its dividend at a 13-year CAGR of 9.6%. Also, it has $4.6 billion left under its existing share repurchase authorization.
Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $10.59 on revenues of 29.4%, representing a year-over-year surge of 45.6% for the bottom line and 2.6% for the top line.
For next year, the Zacks Consensus Estimate for earnings per share stands at $11.27, translating into a year-over-year climb of 4.8%. Revenues are likely to grow 3.9% to $30.5 billion.
Travelers has an expected long-term earnings per share growth rate of 7.5%.
Other Stocks to Consider
Investors also interested in other top-ranked property and casualty insurance stocks may check out Alleghany Corporation , Everest Re Group, Ltd. and Heritage Insurance Holdings, Inc. (HRTG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. It came up with an average four-quarter beat of 5.16%.
Everest Re provides reinsurance and insurance products. The stock pulled off an average four-quarter positive earnings surprise of 10.86%.
Heritage Insurance provides personal and commercial residential insurance products. The company delivered an average four-quarter beat of 14.66%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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5 Reasons Why Travelers Stock Fits Your Portfolio to the Tee
The Travelers Companies Inc. (TRV - Free Report) has seen the Zacks Consensus Estimate for 2018 and 2019 earnings being revised upward over the last 60 days. While current-year estimates moved 0.3% north, the consensus mark for 2019 was nudged up 0.4%. This upward estimate revision reflects analysts’ optimism in the stock.
Notably, the company is a leading provider of property-casualty insurance for auto, home and business.
Shares of this Zacks Rank #2 (Buy) property and casualty insurer have inched up 1.4% year to date, outperforming the industry’s gain of 1% and the S&P 500 index’s loss of 0.3%.
Travelers carries a favorable Value Score of B. Backtested results have shown that stocks with an impressive Value Score of A or B coupled with a bullish Zacks Rank offer best investment bets.
Let’s focus on some factors that make Travelers a lucrative stock for greater returns.
Improving Top line: The top line at Travelers increased nearly 18% since the financial downturn owing to higher net premium earned and rise in investment income. Factors such as a compelling product suit, improved scale, efficiencies, high retention rate, pricing gains, positive renewal rate changes will continue to drive premiums higher.
Increasing Investment Income: Investment income has been growing over the last few quarters. Higher private equity returns offset fixed income returns due to lower reinvestment rates. Recently, the Fed has hiked the rate to 1.75%, indicating two more raises in 2018 and three in 2019, reflecting a progressing economic backdrop. Given an improving rate environment, we expect the momentum to sustain. For 2018, Travelers anticipates about $25-$30 million of higher after-tax net investment income on a quarterly basis.
Strong Underlying Underwriting Margins Guided: Underlying underwriting margin is a measure to assess the performance of a company or its segments. On the back of inherent strengths, Travelers projects higher underlying underwriting margins in 2018 across its Business Insurance, Bond & Specialty Insurance and Personal Insurance than the recorded tally in 2017.
Effective Capital Management: A strong capital position helped Travelers hike its dividend at a 13-year CAGR of 9.6%. Also, it has $4.6 billion left under its existing share repurchase authorization.
Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $10.59 on revenues of 29.4%, representing a year-over-year surge of 45.6% for the bottom line and 2.6% for the top line.
For next year, the Zacks Consensus Estimate for earnings per share stands at $11.27, translating into a year-over-year climb of 4.8%. Revenues are likely to grow 3.9% to $30.5 billion.
Travelers has an expected long-term earnings per share growth rate of 7.5%.
Other Stocks to Consider
Investors also interested in other top-ranked property and casualty insurance stocks may check out Alleghany Corporation , Everest Re Group, Ltd. and Heritage Insurance Holdings, Inc. (HRTG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. It came up with an average four-quarter beat of 5.16%.
Everest Re provides reinsurance and insurance products. The stock pulled off an average four-quarter positive earnings surprise of 10.86%.
Heritage Insurance provides personal and commercial residential insurance products. The company delivered an average four-quarter beat of 14.66%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>