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Can Travelers (TRV) Sustain its Earnings Streak in Q4?

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We expect property and casualty insurer The Travelers Companies, Inc. (TRV - Free Report) to beat expectations when it reports fourth-quarter results on Jan 24, before the market opens.

Why a Likely Positive Surprise?

Our proven model shows that Travelers has the right combination of two key ingredients to beat estimates.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.04%. This is because the Most Accurate estimate of $2.92 is higher than the Zacks Consensus Estimate of $2.89. The positive ESP is a meaningful and leading indicator of a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Travelers carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating on earnings. The combination of Travelers’ Zacks Rank #3 and +1.04% Earnings ESP makes us reasonably confident of an earnings beat.  

Conversely, the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.

What is Driving the Better-Than-Expected Earning

Travelers’ Business and International Insurance segment is likely to report solid results in the to-be-reported quarter, driven by strong returns and production results. Moreover, the company usually displays high levels of retention, and generates robust new business results as well as achieves positive renewal premium change.

Further, the company might report strong top-line growth in Personal Insurance owing to continued growth in policies in force at both Agency Auto and Agency Homeowners businesses.

Also, the company’s net written premiums are expected to have increased due to accelerated growth in Agency Auto as well as in Agency Homeowners. Continued share buyback should have aided the bottom line.

However, the property and casualty (P&C) insurer is expected to report a decline in underwriting results due to catastrophe loss exposure.

With respect to earnings trend, the company delivered positive surprises in three of the last four quarters, with an average beat of 0.68%.

The Travelers Cos. Price and EPS Surprise

 

The Travelers Cos. Price and EPS Surprise | The Travelers Cos. Quote

Other Stocks to Consider

Here are some other P&C insurers that you may want to consider as these also have the right combination of elements to post an earnings beat this quarter:

Chubb Limited (CB - Free Report) , which is set to report fourth-quarter earnings on Jan 31, has an Earnings ESP of +2.88% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Financial Group, Inc. (AFG - Free Report) has an Earnings ESP of +1.89% and a Zacks Rank #2. The company is expected to report fourth-quarter earnings on Feb 1.

The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +3.73% and a Zacks Rank #3. The company is slated to report fourth-quarter earnings on Feb 1.

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