With 2012 just beginning, now's a great time to gauge how the stocks you're interested in are likely to do this year and beyond. By knowing what stock analysts and fellow investors expect from a stock, you'll be smarter about whether you should buy it for your portfolio -- or sell it if you already own it.
Today, let's take a look at Travelers (NYS: TRV) . As I discussed last month, the insurance company had a rough 2011, with natural disasters and harsh weather events combining to produce some big catastrophic losses for the company. But will the bad year bring dividends in 2012 and beyond? Below, I'll take a closer look at what people expect from Travelers and its rivals.
Forecasts on Travelers
Median Target Stock Price
2011 EPS Estimate
2012 EPS Estimate
Expected Annual Earnings Growth, Next 5 Years
CAPS Rating (out of 5)
Sources: Yahoo! Finance, Motley Fool CAPS.
Will Travelers have a better 2012?
Analysts have mixed thoughts about Travelers. On one hand, their target price for the stock is only a few dollars higher than its current share price. Yet earnings are expected to bounce back sharply from their 2011 swoon, with a belief that the major catastrophic events of last year won't repeat themselves.
Still, even 2012's much-improved earnings aren't expected to match Travelers' 2010 levels. That stands in stark contrast to Allstate (NYS: ALL) , which analysts see surpassing 2010 profits in 2012. Similarly, Chubb (NYS: CB) , which didn't take as big a haircut in the 2011 catastrophes, should eke its way past EPS results from two years ago. For Travelers, the magnitude of the damage simply had a greater impact on its long-term profitability.
Even with those challenges, Travelers has stayed healthy on the dividend front. It has a seven-year streak of raising dividends annually, including a 14% raise last year. It's not the only insurance company to give more money back to shareholders -- ACE Limited (NYS: ACE) boosted its dividend by 34% just two days ago. But its ability to do so bodes well for its future prospects.
Bad years often allow insurance companies to increase their prices, reaping bigger rewards if the industry doesn't face back-to-back bad loss years. In the end, 2011's pain could mean Travelers shareholders' gain.
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At the time thisarticle was published Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.
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