Grading the Top-3 Insurance Stocks After Major Beat
There is always a need for insurance. There is no economic environment in which homes, businesses, automobiles and health can be left unprotected.
If last week’s earnings report from The Travelers Companies ($TRV) is any indication, that need for insurance is being fulfilled. New York-based Travelers shot higher by 12% over two sessions, after nearly doubling analysts’ estimates for earnings. A Dow Jones component since 2009, Travelers earned $10.04 per share in the recently ended quarter, versus estimates of $5.40.
With Travelers already trading at overbought levels according to its RSI indicator (arrow), I’m reluctant to chase the stock up here. However, there may be other opportunities in the insurance industry. We went to the charts to analyze three of the biggest names in this sector.
Prudential Financial (PRU)
Prudential Financial ($PRU) is currently working its way through an area of resistance, left behind from January (shaded red). The stock’s all-time high of $130, from late 2024, stands as Prudential’s next obstacle.
Recently, Prudential’s rising 50-day moving average (blue) crossed above its rising 200-day moving average (red), a sign of bullish momentum (circled).
However, while Prudential’s near-term chart shows promise, the monthly chart tells a different story. Despite strong recent performance, Prudential has been trapped in a consolidation pattern for the past 10 years (shaded yellow).
From the beginning of 2017 until now, this stock has gained just 12%. Over that same period, the S&P 500 has climbed by about 240%. Despite the stock’s position in a strong sector, Prudential has been a massive disappointment.
GRADE: C-
Aflac (AFL)
Let’s compare Prudential to Aflac ($AFL), which reached an all-time high on Friday. Aflac has been a steady gainer, rising 12% year-to-date and 22% over the past 12 months.
Aflac’s long-term monthly chart is every bit as bullish as its daily chart. This stock has gained 132% over the past five years.
Aflac is scheduled to report earnings after the close on August 6.
GRADE: A-
MetLife, Inc (MET)
MetLife ($MET) is on par with Aflac. Shares of the New York-based insurer have gained 15% year-to-date, and 22% over the past 12 months.
MetLife shares are climbing within a bullish channel (black lines), and its rising 50-day and 200-day moving averages recently crossed over, a bullish momentum indicator (circled). MetLife is scheduled to report earnings after the close on August 5.
GRADE: A-
Bottom Line
The reaction to the Travelers’ earnings report helped push Aflac and MetLife to all-time highs, so expectations for those names are now inflated. I’d look to buy Aflac or MetLife on a mild, low-volume pullback ahead of earnings.
At the time of publication, Ponsi had no positions in any securities mentioned.
