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Travelers (TRV) Q2 Earnings: Disappointment in Store?
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The Travelers Companies, Inc. (TRV - Free Report) is set to report second-quarter 2016 results on Jul 21, before the market opens. Last quarter, the company posted a negative earnings surprise of 9.34%. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Travelers has likely witnessed a deterioration in its underwriting results owing to higher catastrophe losses stemming from various catastrophic events in the second quarter. As such, combined ratio is expected to have deteriorated in the to-be-reported quarter.
In addition, we expect the company’s investment income to have remained low, mainly due to low reinvestment rates and lesser returns in the non-fixed income portfolio.
However, Travelers is likely to witness a rise in new business written in the to-be-reported quarter.
Moreover, the company is likely to report robust results at its Personal Insurance business, with strong retentions in both Agency Auto and Agency Homeowners. Continued share buyback should boost the bottom line.
With respect to surprise trend, the company delivered a positive surprise in three of the last four quarters with an average beat of 12.28%.
Our proven model does not conclusively show that Travelers is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Travelers has an Earnings ESP of -2.82%. This is because the Most Accurate estimate is pegged at $2.07, while the Zacks Consensus Estimate stands at $2.13.
Zacks Rank: Travelers carries a Zacks Rank #4 (Sell).
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Currently, the stock is trading at $117.38. We expect the release to lead to stock movement.
Stocks to Consider
Here are some companies from the insurance industry that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
W.R. Berkley Corporation (WRB - Free Report) has an Earnings ESP of +1.25% and a Zacks Rank #3. The company is slated to report second-quarter earnings on Jul 25.
Loews Corporation (L - Free Report) has an Earnings ESP of +5.00% and a Zacks Rank #3. The company is set to report second-quarter earnings on Aug 1.
Argo Group International Holdings, Ltd. has an Earnings ESP of +3.19% and a Zacks Rank #3. The company is expected to report second-quarter earnings on Aug 2.
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Travelers (TRV) Q2 Earnings: Disappointment in Store?
The Travelers Companies, Inc. (TRV - Free Report) is set to report second-quarter 2016 results on Jul 21, before the market opens. Last quarter, the company posted a negative earnings surprise of 9.34%. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Travelers has likely witnessed a deterioration in its underwriting results owing to higher catastrophe losses stemming from various catastrophic events in the second quarter. As such, combined ratio is expected to have deteriorated in the to-be-reported quarter.
In addition, we expect the company’s investment income to have remained low, mainly due to low reinvestment rates and lesser returns in the non-fixed income portfolio.
However, Travelers is likely to witness a rise in new business written in the to-be-reported quarter.
Moreover, the company is likely to report robust results at its Personal Insurance business, with strong retentions in both Agency Auto and Agency Homeowners. Continued share buyback should boost the bottom line.
With respect to surprise trend, the company delivered a positive surprise in three of the last four quarters with an average beat of 12.28%.
TRAVELERS COS Price and EPS Surprise
TRAVELERS COS Price and EPS Surprise | TRAVELERS COS Quote
Earnings Whispers
Our proven model does not conclusively show that Travelers is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Travelers has an Earnings ESP of -2.82%. This is because the Most Accurate estimate is pegged at $2.07, while the Zacks Consensus Estimate stands at $2.13.
Zacks Rank: Travelers carries a Zacks Rank #4 (Sell).
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Currently, the stock is trading at $117.38. We expect the release to lead to stock movement.
Stocks to Consider
Here are some companies from the insurance industry that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
W.R. Berkley Corporation (WRB - Free Report) has an Earnings ESP of +1.25% and a Zacks Rank #3. The company is slated to report second-quarter earnings on Jul 25.
Loews Corporation (L - Free Report) has an Earnings ESP of +5.00% and a Zacks Rank #3. The company is set to report second-quarter earnings on Aug 1.
Argo Group International Holdings, Ltd. has an Earnings ESP of +3.19% and a Zacks Rank #3. The company is expected to report second-quarter earnings on Aug 2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>