Travelers Companies Inc. Stock Buy Recommendation Reiterated (TRV)

NEW YORK ( TheStreet) -- Travelers Companies (NYSE: TRV) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 27.86% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • TRAVELERS COS INC has improved earnings per share by 15.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, TRAVELERS COS INC increased its bottom line by earning $6.27 versus $3.34 in the prior year. This year, the market expects an improvement in earnings ($7.62 versus $6.27).
  • TRV's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • 35.20% is the gross profit margin for TRAVELERS COS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.15% is above that of the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, TRAVELERS COS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

The Travelers Companies, Inc., through its subsidiaries, provides various commercial and personal property and casualty insurance products and services to businesses, government units, associations, and individuals primarily in the United States. Travelers Companies has a market cap of $30.1 billion and is part of the financial sector and insurance industry. The company has a P/E ratio of 12.00, below the S&P 500 P/E ratio of 18.00. Shares are up 12.9% year to date as of the close of trading on Monday.

You can view the full Travelers Companies Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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