On Dec 31, 2014, shares of The Travelers Companies, Inc. (TRV) yet again touched a 52-week high of $107.91, driven by a compelling inorganic growth story as well as solid quarterly performances. With 1.1 million shares exchanging hands in the last trading session, the stock finally closed at $105.85. The stock returned 17.8% in 1-year period, more than S&P’s return of 15.97%.
Travelers has always preferred an inorganic route to ramp up its operational performance. Last month, Travelers announced its intentions to acquire a majority stake in Columbia-based surety provider Cardinal Compañía de Segurosin association with J. Malucelli in Brazil.
The acquisition will solidify the company’s presence in the region, thereby enabling it to capitalize on the opportunities, enhancing the surety platform. As a result, the deal will help Travelers boost its net written premium volume.
With respect to its performance in the third quarter of 2014, Travelers delivered earnings of $2.61 per share, outperforming the Zacks Consensus Estimate by 18.64% and improving 11% year over year on higher net investment income and lower catastrophe losses. This Zacks Rank #3 (Hold) property and casualty insurer delivered positive earnings surprises in three of the last four quarters with an average beat of 18.58%.
Travelers has always remained committed to enhance its shareholders value. It spent $2.3 billion to buy back 8.1 million shares during the first nine months of 2014. The company is currently left with $2.5 billion under its authorization. Additionally, Travelers paid a dividend of 55 cents. Its dividend currently yields 2.08%, better than the industry average of 1.95%.
The Zacks Consensus Estimate for 2014 has been witnessing upward revisions on this slew of positives. It increased 0.6% to $9.93 in the last 60 days, representing an about 5% year-over-year increase. The expected long-term earnings growth rate is currently pegged at 7.7%.
Other Stocks to Consider
Better-ranked property casualty insurers worth considering include AmTrust Financial Services, Inc. (AFSI), W.R. Berkley Corporation (WRB) and Arch Capital Group Ltd. (ACGL). All these sport Zacks Rank #1 (Strong Buy).
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