Travelers Companies Inc. (TRV) recently raised full year guidance as it surprised on estimates for the third time in the last 4 quarters. The company is trading with a forward P/E of just 8.9.
Company Description
Travelers provides property and casualty insurance for autos, homes and businesses.
Travelers Surprised by 23.85% in the Third Quarter
On Oct 22, Travelers reported third quarter results which beat the Zacks Consensus Estimate by 31 cents. Earnings per share were $1.61 compared to the Zacks Consensus of $1.30. EPS was 55 cents in the year ago period.
Written premiums fell 3% to $5.34 billion from the year ago period due to global economic conditions. Renewal rates were positive in all business segments which offset the impact of lower coverage demands from existing policyholders due to the recession.
New business volumes fell slightly from the third quarter of 2008. Personal Insurance saw lower volumes while there was modest growth in Business Insurance and Financial, Professional and International Insurance.
Shares Repurchased and Dividend Increased
The company has continued to repurchase stock. It bought back $1 billion in the third quarter and is forecasting purchasing $1.5 billion in the fourth quarter, more than its prior expectation. Additionally, Travelers is expanding its share repurchase program by another $6 billion.
The Board also increased the dividend by 10% to 33 cents per share. The stock is currently yielding 2.70%.
Raised Guidance
Travelers is optimistic about the full year. It raised earnings guidance to the range of $5.30 to $5.50 from prior guidance of $4.80 to $5.05.
Covering analysts scrambled to raise estimates. 13 out of 17 analysts raised in the last 30 days with the Zacks Consensus Estimate jumping to $5.63 from $5.22. This is higher than the company’s current guidance range.
Fourth quarter estimates are also spiking. The Zacks Consensus Estimate jumped 9 cents to $1.48 in the last month with 12 out of 14 analysts raising in that time.
Value Fundamentals
Travelers is a Zacks #1 Rank (strong buy) stock. It has a price-to-book of 1.02. The company also has a solid 5-year average return on equity (ROE) of 12.69%.
