Travelers Companies (TRV) Spotted As Roof Leaker Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Travelers Companies ( TRV) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Travelers Companies as such a stock due to the following factors:

  • TRV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $172.4 million.
  • TRV has traded 448,418 shares today.
  • TRV is trading at 19.88 times the normal volume for the stock at this time of day.
  • TRV crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on TRV:

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. The stock currently has a dividend yield of 2.3%. TRV has a PE ratio of 11.2. Currently there are 8 analysts that rate Travelers Companies a buy, no analysts rate it a sell, and 12 rate it a hold.

The average volume for Travelers Companies has been 1.9 million shares per day over the past 30 days. Travelers Companies has a market cap of $32.0 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.06 and a short float of 1.6% with 2.94 days to cover. Shares are down 3.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Travelers Companies as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, growth in earnings per share, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Although TRV's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average.
  • Net operating cash flow has slightly increased to $1,637.00 million or 9.06% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -23.32%.
  • TRAVELERS COS INC's earnings per share improvement from the most recent quarter was slightly positive. 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 ($8.93 versus $6.27).
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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