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Is a Beat in Store for Travelers (TRV) This Earnings Season?
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The Travelers Companies, Inc. (TRV - Free Report) is set to report fourth-quarter 2023 earnings on Jan 19. The company delivered an earnings surprise in one of the three reported quarters of 2023 while missing in the other two.
Factors to Consider
Travelers’ fourth-quarter results are likely to benefit from solid performance across its three segments.
Improved pricing, solid renewal rate change, strong retention and exposure growth are likely to have favored premiums in the to-be-reported quarter. The Zacks Consensus Estimate for premiums is pegged at $9.9 billion, indicating a 12.6% increase from the year-ago reported number. We estimate premiums to increase 10.1% to $9.7 billion.
Travelers expects after-tax net investment income from the non-fixed income portfolio, including earnings from short-term securities, of about $615 million. Improved interest rate environment, higher average levels of invested assets, better results from the fixed-income portfolio and strong returns from the non-fixed income portfolio are likely to aid investment results in the to-be-reported quarter. The Zacks Consensus Estimate for NII is $796 million, indicating an increase of 27.4% from the year-ago reported number. We estimate the metric to increase 24.3% to $776.6 million.
Continued growth at the profitable agency auto and homeowners business is likely to aid the results of the Personal Insurance segment in the quarter to be reported. We estimate earned premiums at Personal Insurance to be $3.8 billion, indicating an improvement of 10% from the year-ago reported figure.
An increase in net written premiums coupled with higher net investment income and other revenues is likely to have aided the top line in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is currently pegged at $10.9 billion, indicating a 13.3% increase from the year-ago reported figure.
Travelers is expected to have benefited from better pricing and increased exposure, which are likely to have aided underwriting profitability. The Zacks Consensus Estimate for combined ratio is pegged at 93, improving 200 basis points. We estimate the combined ratio to be 91.1.
Continued share buybacks are anticipated to have provided an additional boost to the bottom line.
However, expenses are expected to have risen on higher claims and claim adjustment expenses, amortization of deferred acquisition costs, general and administrative expenses as well as interest expense. We estimate expenses to increase 8.3% in the to-be-reported quarter.
The Zacks Consensus Estimate for fourth-quarter 2023 earnings per share is pegged at $4.99, suggesting an increase of 46.8% from the year-ago reported figure.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Travelers this time around. This is because a stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Earnings ESP: Travelers has an Earnings ESP of +1.56%. This is because the Most Accurate Estimate is pegged at $5.07, higher than the Zacks Consensus Estimate of $4.99. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
The Travelers Companies, Inc. Price and EPS Surprise
Some other insurance stocks with the right combination of elements to deliver an earnings beat this time around are:
Chubb Limited (CB - Free Report) has an Earnings ESP of +1.97% and a Zacks Rank #2 at present. The Zacks Consensus Estimate for fourth-quarter 2023 earnings is pegged at $5.00, indicating a year-over-year increase of 23.5%.
CB’s earnings beat estimates in three of the last four reported quarters while missing in one.
Arch Capital Group Ltd. (ACGL - Free Report) has an Earnings ESP of +1.76% and a Zacks Rank #2 at present. The Zacks Consensus Estimate for fourth-quarter 2023 earnings is pegged at $1.93, indicating a year-over-year decrease of 9.8%.
ACGL’s earnings beat estimates in each of the last four reported quarters.
Allstate Corporation (ALL - Free Report) has an Earnings ESP of +12.14% and currently carries a Zacks Rank of 3. The Zacks Consensus Estimate for fourth-quarter 2023 earnings is pegged at $3.11, implying an increase of 328.7% from the year-ago reported figure.
ALL’s earnings beat estimates in three of the last four reported quarters while missing in one.
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Is a Beat in Store for Travelers (TRV) This Earnings Season?
The Travelers Companies, Inc. (TRV - Free Report) is set to report fourth-quarter 2023 earnings on Jan 19. The company delivered an earnings surprise in one of the three reported quarters of 2023 while missing in the other two.
Factors to Consider
Travelers’ fourth-quarter results are likely to benefit from solid performance across its three segments.
Improved pricing, solid renewal rate change, strong retention and exposure growth are likely to have favored premiums in the to-be-reported quarter. The Zacks Consensus Estimate for premiums is pegged at $9.9 billion, indicating a 12.6% increase from the year-ago reported number. We estimate premiums to increase 10.1% to $9.7 billion.
Travelers expects after-tax net investment income from the non-fixed income portfolio, including earnings from short-term securities, of about $615 million. Improved interest rate environment, higher average levels of invested assets, better results from the fixed-income portfolio and strong returns from the non-fixed income portfolio are likely to aid investment results in the to-be-reported quarter. The Zacks Consensus Estimate for NII is $796 million, indicating an increase of 27.4% from the year-ago reported number. We estimate the metric to increase 24.3% to $776.6 million.
Continued growth at the profitable agency auto and homeowners business is likely to aid the results of the Personal Insurance segment in the quarter to be reported. We estimate earned premiums at Personal Insurance to be $3.8 billion, indicating an improvement of 10% from the year-ago reported figure.
An increase in net written premiums coupled with higher net investment income and other revenues is likely to have aided the top line in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is currently pegged at $10.9 billion, indicating a 13.3% increase from the year-ago reported figure.
Travelers is expected to have benefited from better pricing and increased exposure, which are likely to have aided underwriting profitability. The Zacks Consensus Estimate for combined ratio is pegged at 93, improving 200 basis points. We estimate the combined ratio to be 91.1.
Continued share buybacks are anticipated to have provided an additional boost to the bottom line.
However, expenses are expected to have risen on higher claims and claim adjustment expenses, amortization of deferred acquisition costs, general and administrative expenses as well as interest expense. We estimate expenses to increase 8.3% in the to-be-reported quarter.
The Zacks Consensus Estimate for fourth-quarter 2023 earnings per share is pegged at $4.99, suggesting an increase of 46.8% from the year-ago reported figure.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Travelers this time around. This is because a stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Earnings ESP: Travelers has an Earnings ESP of +1.56%. This is because the Most Accurate Estimate is pegged at $5.07, higher than the Zacks Consensus Estimate of $4.99. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
The Travelers Companies, Inc. Price and EPS Surprise
The Travelers Companies, Inc. price-eps-surprise | The Travelers Companies, Inc. Quote
Zacks Rank: Travelers currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks to Consider
Some other insurance stocks with the right combination of elements to deliver an earnings beat this time around are:
Chubb Limited (CB - Free Report) has an Earnings ESP of +1.97% and a Zacks Rank #2 at present. The Zacks Consensus Estimate for fourth-quarter 2023 earnings is pegged at $5.00, indicating a year-over-year increase of 23.5%.
CB’s earnings beat estimates in three of the last four reported quarters while missing in one.
Arch Capital Group Ltd. (ACGL - Free Report) has an Earnings ESP of +1.76% and a Zacks Rank #2 at present. The Zacks Consensus Estimate for fourth-quarter 2023 earnings is pegged at $1.93, indicating a year-over-year decrease of 9.8%.
ACGL’s earnings beat estimates in each of the last four reported quarters.
Allstate Corporation (ALL - Free Report) has an Earnings ESP of +12.14% and currently carries a Zacks Rank of 3. The Zacks Consensus Estimate for fourth-quarter 2023 earnings is pegged at $3.11, implying an increase of 328.7% from the year-ago reported figure.
ALL’s earnings beat estimates in three of the last four reported quarters while missing in one.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.