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Travelers: A Quadrix Leader
07/09/2014 8:00 am EST
Our Quadrix stock-rating system ranks some 4,900 companies based on more than 90 different variables for each of those companies. Here, we look at an insurance giant that has an overall Quadrix score of 100—the highest possible score, explains Chuck Carlson, DRIP Investor.
Travelers (TRV) also has the highest possible peer-group scores; its two sector-specific scores are both 100. Investors should buy such strong numbers, which means investors should be adding Travelers to their portfolios.
Travelers Quadrix scores are not the only strong numbers that Travelers has been posting. The company has beaten the consensus analysts’ earnings estimates in each of the last four quarters by, at least, 13%. The earnings beat in the March quarter was by nearly 37%.
The company’s combined ratio for the March quarter was 85.7%, a very solid number. (A combined ratio less than 100% means an insurer is taking in more than it is paying out.)
Another strong number is the stock’s yield of 2.3%. Travelers recently boosted the dividend 10%, the tenth consecutive year the firm has increased the dividend.
There is some concern that the insurance environment cannot get any better than it has been over the last 12 months, or so, signaling that Travelers is perhaps running at peak earnings at this time. However, the stock’s Quadrix Value score of 97 indicates there is still plenty of upside in these shares.
Travelers has a lot to offer DRIP investors—good operating momentum, attractive valuation, decent yield, above-average dividend growth, and a blue-chip pedigree.
I would expect these shares to trade above $100 per share over the next 12 months. The stock has not split since 1998, so a stock split from the current price levels would not be a surprise.
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