Why is it Worth Holding Travelers (TRV) in Your Portfolio?
Travelers Companies (TRV) is poised to grow high levels of retention, improved pricing, and increase in new business while achieving a positive renewa...
The Travelers Companies, Inc.’s TRV strong renewal rate change, retention, increase in new business, solid balance sheet, and favorable growth estimates make it worth retaining in one’s portfolio.
The company has a solid track record of beating earnings estimates in the last four quarters, with the average being 32.40%.
Zacks Rank & Price Performance
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The Zacks Consensus Estimate for 2021 earnings is pegged at $12.27, indicating a 17.1% increase from the year-ago reported figure on 6.3% higher revenues of $34 billion. The consensus estimate for 2022 earnings is pegged at $12.53, indicating an increase of 2.2% from the year-ago reported figure on 4.8% higher revenues of $35.6 billion.
The long-term earnings growth rate is currently pegged at 6.3%. The company has a Growth Score of B. This style score analyzes the growth prospects of a company.
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 12.7%, comparing favorably with the industry’s 5.7%, reflecting the company’s efficiency in utilizing shareholders’ fund. It has been increasing core return on equity over the last three years and aims to generate mid-teens core ROE over time.
The Zacks Consensus Estimate for 2021 has moved 9.3% north while the same for 2022 has moved up 0.8% in the past 60 days, reflecting analyst optimism.
The company has an impressive VGM Score of A. This style score rates stocks on their combined weighted styles, helping to identify those with the most attractive value, best growth, and most promising momentum.
Travelers is one of the leading writers of auto and homeowners’ insurance plus commercial U.S. property-casualty insurance. It remains optimistic about the personal line of business, given growth at the profitable agency auto and homeowners business. The company’s focus on implementing pricing and other actions should continue to increasing returns and improve profitability.
The company has successfully maintained historically high levels of retention, improved pricing, and increase in new business while achieving a positive renewal premium change.
The insurer boasts a very high-quality investment portfolio, generating solid net investment income. The company expects after-tax net investment income from non-fixed income portfolio to be approximately $425 million to $435 million in each of the remaining quarters of 2021, up from $420-$430 million guided earlier.
Being a property and casualty insurer, it is exposed to catastrophe loss that induces underwriting volatility, However, it has an active catastrophe reinsurance program, which should lend support in absorbing losses.
Solid Dividend History
The company has been hiking dividends for the last 17 years. Its dividend increased at a five-year CAGR of 7.5%. Its current dividend yield of 2.2% is better than the industry average of 0.4%.
Strong Capital Position
Travelers maintains a conservative balance sheet among its peers. Its statutory capital and surplus stood at $22.8 billion at second-quarter 2021 end. The debt-to-capital ratio (excluding after-tax net unrealized investment gains included in shareholders’ equity) was 20, within the company’s target range of 15-25. It has been consistently increasing its book value for the past nine years.
Stocks to Consider
Some better-ranked stocks in the same space include Chubb Limited CB, Cincinnati Financial Corporation CINF, and Everest Re Group RE, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chubb delivered an earnings surprise of 22.30% in the last reported quarter.
Cincinnati Financial delivered an earnings surprise of 80.81% in the last reported quarter.
Everest Re Group delivered an earnings surprise of 62.56% in the last reported quarter.
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The Travelers Companies, Inc. (TRV): Free Stock Analysis Report
Chubb Limited (CB): Free Stock Analysis Report
Cincinnati Financial Corporation (CINF): Free Stock Analysis Report
Everest Re Group, Ltd. (RE): Free Stock Analysis Report
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