The Travelers Companies, Inc. TRV is set to report first-quarter 2015 results on Apr 21 before the market opens. Last quarter, the company posted a +21.3% surprise. Let’s see how things are shaping up for this announcement.
Factors Influencing This Past Quarter
Travelers prudent pricing strategy of retaining major businesses that are delivering target returns, improving profitability where needed, and writing new business that meets target returns will help it to deliver solid returns in the quarter.
The new lower-cost, lower-priced auto insurance product Quantum 2.0 is live in virtually in all the planned states. This will help improve volumes with attractive returns.
Acquisitions continue to back its performance while the company will also realize savings from expense reduction initiatives.
Continued share repurchases will boost the bottom line in the quarter to be reported.
Since the interest rate environment is still soft, investment income from the non-fixed maturity portfolio is likely to stay low.
Earnings Whispers?
Our proven model does not conclusively show that Travelers Companies is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Travelers Companies has a -3.94% Earnings ESP. This is because the Most Accurate estimate stands at $2.44 while the Zacks Consensus Estimate stand at $2.54.
Zacks Rank: Travelers Companies carries a Zacks Rank #3 (Hold). Though this increases the predictive power, the company’s ESP of -2.33% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
AXIS Capital Holdings Limited AXS Earnings ESP of +13.56% and a Zacks Rank #2 (Buy).
PartnerRe Ltd. PRE, Earnings ESP of +6.10% and a Zacks Rank #2.
Everest Re Group Ltd. RE, Earnings ESP of +6.79% and a Zacks Rank #3.
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