The Travelers Companies (NYSE:TRV), Inc. TRV has been showing a consistent operating performance over the past many quarters on the back of its strong retention, new business and lower catastrophe loss.
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $11.23 and $12.43, indicating year-over-year increase of 7.1% and 10.6%, respectively.
Earnings Surprise History
Travelers has a decent earnings surprise history. It beat estimates in each of the last four quarters, with the average being 20.7%.
Zacks Rank & Price Performance
Travelers currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 30.5% compared with the industry’s increase of 36.7%.
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Style Score
The company 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.
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 9.6%, better than the industry average of 5.6%, reflecting the company’s efficiency in utilizing shareholders’ fund.
Business Tailwinds
Business Insurance should gain from higher levels of underlying underwriting income, net favorable prior year reserve development, net investment income and lower catastrophe losses. The underlying combined ratio should improve from earned pricing that exceeded loss cost trends. In Business Insurance, renewal premium change increased to its highest level since 2013, while retention remained strong.
Specialty Insurance and Personal Insurance, both benefited from higher earned premiums with continued strong margins.
Net written premiums in Personal Insurance are likely to improve, given its higher renewal premium in homeowners business, strong retention and new business in both auto and home.
New business for both auto and home combined grew 17% year over year, reflecting the 9th consecutive quarter of double-digit growth in new business.
Net written premiums in Bond & Specialty Insurance, continue to gain from renewal premium change in management liability business and strong retention.
The property and casualty insurer expects fixed income net investment income, including earnings from short-term securities, in the range of $420 million and $430 million per quarter after-tax, for the remainder of 2021.
Moreover, Travelers boasts a healthy balance sheet along with an impressive solvency level. Debt-to-capital ratio remained within target range and there is no maturing long-term debt over the next five years. The capital ratios were better than target levels and it maintains liquidity of around $1.8 billion.
In April 2021, its board of directors hiked its quarterly cash dividend by 4%, reflecting the 17th consecutive year of dividend increase at Travelers along with a compound annual growth rate of 9%. Its current dividend yield of 2.4% is better than the industry average of 0.4%, which makes the stock an attractive pick for yield-seeking investors. Currently, it has $805 million remaining under its share repurchase authorization.
Stocks to Consider
Some better-ranked players in the property and casualty industry are Alleghany (NYSE:Y) Y, Fidelity National Financial (NYSE:FNF) FNF and RLI (NYSE:RLI) Corp. RLI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alleghany’s bottom line surpassed estimates in each of the last four quarters, the average beat being 128.63%.
Fidelity National Financial surpassed earnings estimates in each of the last four quarters, the average being 38.65%.
RLI Corp. surpassed estimates in each of the last four quarters, the average beat being 160.65%.
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