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Here's Why You Should Hold Travelers (TRV) in Your Portfolio
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The Travelers Companies, Inc. (TRV - Free Report) is well-poised to gain from a strong renewal rate change, solid retention and an increase in new business supported by a compelling portfolio and solid capital position.
Optimistic Growth Projections
The Zacks Consensus Estimate for Travelers’ 2024 earnings per share indicates an increase of 30.9% from the year-ago reported number. The consensus estimate for revenues is pegged at $46.12 billion, implying a year-over-year improvement of 11.2%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 16.8% and 7.9%, respectively, from the corresponding 2024 estimates.
Zacks Rank & Price Performance
TRV currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 27.8% compared with the industry’s growth of 21.3%.
Image Source: Zacks Investment Research
Earnings Surprise History
TRV has a solid track record of beating earnings estimates in two of the last four quarters while missing in the other two, the average being 7.47%.
Style Score
Travelers has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Return on Capital
Travelers’ return on equity for the trailing 12 months is 15.9%, which expanded 520 basis points year over year, reflecting the company’s efficiency in utilizing shareholders’ funds. Also, return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame. This reflects TRV’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 8.5%, better than the industry average of 5.9%.
Business Tailwinds
Travelers should continue to benefit from a compelling product portfolio of coverages across nine lines of business. This, in turn, helps it maintain a solid retention level, better pricing and increase new business while achieving a positive renewal premium change.
Investment income has been gaining from higher returns from the non-fixed income portfolio. Travelers expects fixed income net investment income, including earnings from short-term securities, to be $675 million after tax in the third quarter and $695 million in the fourth quarter.
An active catastrophe reinsurance program continues to help this P&C insurer absorb losses, which otherwise induce volatility in underwriting profitability.
TRV maintains a conservative balance sheet among its peers, continually increasing its book value for the past 10 years. It remains focused on keeping the debt-to-capital ratio between 15 and 25.
Travelers has an impressive dividend history. It increased dividends for the last 20 years, banking on solid cash flows. Its dividend yield of 1.9% appears attractive compared with the industry average of 0.2%, making it an attractive pick for yield-seeking investors. This insurer also buys back shares regularly and had $5.54 billion remaining under repurchase authorization at second-quarter 2024 end.
Being a property and casualty insurer, TRV is exposed to cat losses, which induce volatility in profits. Nevertheless, its active reinsurance programs limit losses.
NMI Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 10.15%. In the past year, shares of NMIH have jumped 25.7%. The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 15.6% and 5.5%, respectively.
Root’s earnings surpassed estimates in each of the last four quarters, the average surprise being 47.87%. In the past year, shares of ROOT have jumped 396.1%. The Zacks Consensus Estimate for ROOT’s 2024 and 2025 earnings implies year-over-year growth of 60.6% and 37.5%, respectively.
The Progressive’s earnings surpassed estimates in each of the last four quarters, the average surprise being 24.08%. In the past year, shares of PGR have jumped 76.1%. The Zacks Consensus Estimate for PGR’s 2024 and 2025 earnings implies year-over-year growth of 96.7% and 5.3%, respectively.
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Here's Why You Should Hold Travelers (TRV) in Your Portfolio
The Travelers Companies, Inc. (TRV - Free Report) is well-poised to gain from a strong renewal rate change, solid retention and an increase in new business supported by a compelling portfolio and solid capital position.
Optimistic Growth Projections
The Zacks Consensus Estimate for Travelers’ 2024 earnings per share indicates an increase of 30.9% from the year-ago reported number. The consensus estimate for revenues is pegged at $46.12 billion, implying a year-over-year improvement of 11.2%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 16.8% and 7.9%, respectively, from the corresponding 2024 estimates.
Zacks Rank & Price Performance
TRV currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 27.8% compared with the industry’s growth of 21.3%.
Image Source: Zacks Investment Research
Earnings Surprise History
TRV has a solid track record of beating earnings estimates in two of the last four quarters while missing in the other two, the average being 7.47%.
Style Score
Travelers has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Return on Capital
Travelers’ return on equity for the trailing 12 months is 15.9%, which expanded 520 basis points year over year, reflecting the company’s efficiency in utilizing shareholders’ funds. Also, return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame. This reflects TRV’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 8.5%, better than the industry average of 5.9%.
Business Tailwinds
Travelers should continue to benefit from a compelling product portfolio of coverages across nine lines of business. This, in turn, helps it maintain a solid retention level, better pricing and increase new business while achieving a positive renewal premium change.
Investment income has been gaining from higher returns from the non-fixed income portfolio. Travelers expects fixed income net investment income, including earnings from short-term securities, to be $675 million after tax in the third quarter and $695 million in the fourth quarter.
An active catastrophe reinsurance program continues to help this P&C insurer absorb losses, which otherwise induce volatility in underwriting profitability.
TRV maintains a conservative balance sheet among its peers, continually increasing its book value for the past 10 years. It remains focused on keeping the debt-to-capital ratio between 15 and 25.
Travelers has an impressive dividend history. It increased dividends for the last 20 years, banking on solid cash flows. Its dividend yield of 1.9% appears attractive compared with the industry average of 0.2%, making it an attractive pick for yield-seeking investors. This insurer also buys back shares regularly and had $5.54 billion remaining under repurchase authorization at second-quarter 2024 end.
Being a property and casualty insurer, TRV is exposed to cat losses, which induce volatility in profits. Nevertheless, its active reinsurance programs limit losses.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are NMI Holdings Inc (NMIH - Free Report) , Root, Inc. (ROOT - Free Report) and The Progressive Corporation (PGR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NMI Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 10.15%. In the past year, shares of NMIH have jumped 25.7%. The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 15.6% and 5.5%, respectively.
Root’s earnings surpassed estimates in each of the last four quarters, the average surprise being 47.87%. In the past year, shares of ROOT have jumped 396.1%. The Zacks Consensus Estimate for ROOT’s 2024 and 2025 earnings implies year-over-year growth of 60.6% and 37.5%, respectively.
The Progressive’s earnings surpassed estimates in each of the last four quarters, the average surprise being 24.08%. In the past year, shares of PGR have jumped 76.1%. The Zacks Consensus Estimate for PGR’s 2024 and 2025 earnings implies year-over-year growth of 96.7% and 5.3%, respectively.