Travelers Q4 Earnings: Can TRV Hit Its $3.21 EPS Target?

in EARNINGS/INVESTING IDEAS by

The Travelers Companies, Inc. (NYSE:TRV) is scheduled to report Q4 earnings results on January 23, 2020, before markets open for trading.

The company is expected to report earnings of $3.21/share on revenue of $7.265 billion. The consensus earnings per share (EPS) of $3.21/share is based on a poll of 21 analysts and represents a growth of 50.7% over the same quarter last year when the company reported earnings of $2.13/share.

The revenue forecast of $7.265 billion based on a poll of 6 analysts implies a year-over-year (YoY) growth of 4.6%. Last year the company reported $6.945 billion in revenue for the quarter.

Expected to report EPS growth of $1.08/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $7,265.00 $6,945.00 4.6%
EPS $3.21 $2.13 50.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 3 out of the last 8 tracked quarters, and missed expectations 5 quarters.

What are your expectations from Travelers for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $2.38 $1.43 -39.9% Missed
Q2, 2019 $2.33 $2.02 -13.5% Missed
Q1, 2019 $2.74 $2.83 3.3% Beat
Q4, 2018 $2.14 $2.13 -0.5% Missed
Q3, 2018 $2.25 $2.54 13.1% Beat
Q2, 2018 $2.39 $1.81 -24.3% Missed
Q1, 2018 $2.75 $2.46 -10.5% Missed
Q4, 2017 $1.46 $2.28 56.2% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report.

After the last earnings report for the period ending September 30, 2019, the stock price reacted by falling by -6.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-22 $141.91 $132.16 -6.9% Decline
2019-07-23 $149.71 $148.85 -0.6% Decline
2019-04-18 $135.87 $138.93 2.3% Increase
2019-01-22 $124.01 $123.02 -0.8% Decline

Fundamentals And Technical Analysis

Travelers is currently trading at $140.91/share, up 0.1% for the day. The company is trading at approximately 90.9% of its 52-week high of $155.09/share. The company’s stock price is up 6.6% since the last earnings report and up 3.1% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 67.02 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

NYSE:TRV Stock Price Chart Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 15.3x and a forward P/E multiple of 14.5x. Travelers’ current share price also implies a price-to-book (P/B) multiple of 1.4x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date September 30, 2019
Stock Price (Current) $140.91
P/E Ratio 15.3x
P/E Ratio (Fwd) 14.5x
PEG Ratio 1.8
Total Debt to Capital (%) 16.1%
Levered Free Cash Flow $4.741 billion
Enterprise Value / EBITDA 10.9x

Source: Finbox

Company Profile: The Travelers Companies, Inc.

The Travelers Companies, Inc. is a large-cap stock with a market capitalization of $36.324 billion and a total enterprise value of $42.765 billion. The company operates in the Financial sector and the Insurance industry.

The Travelers Companies, Inc., through its subsidiaries, provides a range of commercial and personal property, and casualty insurance products and services to businesses, government units, associations, and individuals in the United States and internationally. The company operates through three segments: Business Insurance, Bond & Specialty Insurance, and Personal Insurance.

The Business Insurance segment offers workers’ compensation, commercial automobile and property, general liability, commercial multi-peril, employers’ liability, public and product liability, professional indemnity, marine, aviation, onshore and offshore energy, construction, terrorism, personal accident, and kidnap and ransom insurance products. This segment operates through select accounts, which serve small businesses; commercial accounts that serve mid-sized businesses; national accounts, which serve large companies; and national property and other that serve large and mid-sized customers, commercial transportation industry, and agricultural businesses, as well as markets and distributes its products through brokers, wholesale agents, program managers, and specialized retail agents.

The Bond & Specialty Insurance segment provides surety, fidelity, management and professional liability, and other property and casualty insurance products.

The Personal Insurance segment offers property and casualty insurance covering personal risks, primarily automobile and homeowners insurance to individuals.

The company distributes its products primarily through independent agencies and brokers.

The Travelers Companies, Inc. was founded in 1853 and is based in New York, New York.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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