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Travelers Upgraded to Buy

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On Apr 10, Zacks Investment Research upgraded The Travelers Companies, Inc. (TRV - Free Report) to a Zacks Rank #2 (Buy).

Why the Upgrade?

Travelers has been witnessing rising earnings estimates since it reported solid fourth-quarter results.

Moreover, on Apr 2, the property and casualty insurer announced the launch of MedFirst Plus, comprising four new coverage endorsements to its MedFirst policy. The policy will likely be useful to medical technology companies to cover data theft, malicious tampering and wireless malfunction risks.

Over the last 30 days, 5 of 16 estimates moved north pushing the Zacks Consensus Estimate for 2013 to $7.13 by 1.4%.  Also 4 of 16 estimates were raised for 2014 to push the Zacks Consensus Estimate to $7.43 by 0.7% over the same time frame.

With respect to earnings trend, Travelers delivered positive earnings surprises in all of the last 4 quarters with an average beat of 140.74%. Our proven model shows that the property & casualty insurer is likely to beat earnings in the first quarter of 2013 because it has a right combination of a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and Zacks Rank.  ESP, or Expected Surprise Prediction, represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate is +2.55%.

Travelers is scheduled to release its first-quarter 2013 earnings results on Apr 23. The Zacks Consensus Estimate for the first quarter is currently pegged at $1.96.

Travelers boasts of a strong dividend yield, which in turn helps retain investor confidence. Its dividend yield of 2.16% is better than the industry average of 2.03%.

Additionally, due to the absence of any significant catastrophe event in the first quarter, the company’s underwriting performance is expected to deliver better results.

Other Stocks to Consider

Apart from Travelers, other stocks that are outperforming in the insurance sector include AXIS Capital Holdings Ltd. (AXS - Free Report) , XL Group Plc (XL - Free Report) and Arch Capital Group Ltd. (ACGL - Free Report) . All these stocks carry a Zacks Rank #1 (Strong Buy).


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