The Travelers Companies Inc (TRV) occupies a strong market position in the property and casualty (P&C) industry, which has aided the company to become one of the leading writers of auto and homeowners’ insurance and commercial U.S. property-casualty insurance.
Moreover, the P&C insurer is anticipated to benefit from its strong market position and reap economies of scale. Further, the company remains committed toward the implementation of pricing actions to continue increasing returns.
Travelers also stands to benefit from the recent hike in interest rate by the Fed in its Dec 2016 FOMC meeting. Investment income that forms a major component of the top line will get a boost from the rate hike.
In addition, the P&C insurer’s inorganic growth story remains impressive. The company undertakes strategic buyouts to diversify operations and boost operational performance. Consequently, these initiatives will accelerate its overall growth.
Moreover, the company has been generating sufficient capital to engage in shareholder-friendly moves. Furthermore, the company has a robust liquidity position and has been making efforts to improve leverage ratios.
Notably, shares of this Zacks Rank #3 (Hold) insurer gained 5.65% in the last one month, outperforming the Zacks categorized Property and Casualty Insurance industry’s growth of 2.43%. The company also has witnessed 2017 estimates moving up by a cent in the last 60 days.
Interestingly, Travelers carries a VGM score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. In fact, valuation at the current level is attractive as the stock is trading at a forward P/E ratio of 12.7, a 56.1% discount to the industry average of 28.9.
Further, Travelers has a trailing 12-month return on equity (ROE) of 12.1%, which is higher than the industry average of 7%.
Additional P&C Stocks to Consider
Some better-ranked stocks from the same space include Axis Capital Holdings Limited (AXS), State National Companies Inc (SNC) and Mercury General Corporation (MCY). Each of these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AXIS Capital offers specialty lines insurance and treaty reinsurance products worldwide. The company delivered positive surprises in all of the last four quarters with an average beat of 30.19%.
State National Companies offers property and casualty insurance in the United States. The company delivered positive surprises in two of the last four quarters with an average beat of 21.28%.
Mercury General deals in writing personal automobile insurance in the United States. It delivered positive surprises in two of the last four quarters, but with an average miss of 21.04%.
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