Travelers Q3 Earnings: Can NYSE:TRV Hit Its $3.10 EPS Target?

in EARNINGS/INVESTING IDEAS by

The Travelers Companies, Inc. (NYSE:TRV) is scheduled to report Q3 earnings results on October 20, 2020.

The company is expected to report earnings of $3.10/share on revenue of $7.319 billion. The consensus earnings per share (EPS) of $3.10/share is based on a poll of 19 analysts and represents a growth in eps of 116.7% over the same quarter last year, when the company reported earnings of $1.43/share.

The revenue forecast of $7.319 billion based on a poll of 7 analysts implies a year-over-year (YoY) growth in revenue of 2.0%. Last year the company reported $7.179 billion in revenue for the quarter.

Expected to report EPS growth of 116.7% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $7,319.14 $7,179.00 2.0%
EPS $3.10 $1.43 116.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 3 out of the last 8 tracked quarters, missed 4 quarters, and met expectations 1 quarters.

What are your expectations from The Travelers Companies, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.20 -$0.20 −0.7% Missed
Q1, 2020 $2.86 $2.62 −8.3% Missed
Q4, 2019 $3.27 $3.32 1.4% Beat
Q3, 2019 $2.35 $1.43 −39.1% Missed
Q2, 2019 $2.30 $2.02 −12.3% Missed
Q1, 2019 $2.73 $2.83 3.7% Beat
Q4, 2018 $2.18 $2.13 −2.4% Missed
Q3, 2018 $2.26 $2.54 12.6% 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 June 30, 2020, the stock price reacted by falling −3.2%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 23, 2020 $122.24 $118.28 −3.2% Decline
April 21, 2020 $101.78 $101.79 0.0% Increase
January 23, 2020 $141.34 $134.78 −4.6% Decline
January 23, 2020 $141.34 $134.78 −4.6% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.55, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.55 implies a 0.5% chance of earnings manipulation.

Fundamentals And Technical Analysis

The Travelers Companies, Inc. is currently trading at $114.02/share, up 0.6% for the day. The company is trading at approximately 80.1% of its 52-week high of $142.22/share. The company’s stock price is down −3.6% since the last earnings report and down −2.2% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 49.13 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 15.85 and a forward P/E multiple of 12.98.

The Travelers Companies, Inc.’s current share price also implies a price-to-book (P/B) multiple of 1.07. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $114.02
P/E Ratio 15.8x
P/E Ratio (Fwd) 13.0x
PEG Ratio −0.5
Total Debt / Total Capital 20.5%
Levered Free Cash Flow $5.705 billion
EV / EBITDA −11.8x

Finbox

The Travelers Companies, Inc. is a large-cap stock with a market capitalization of $28.692 billion and a total enterprise value of $35.464 billion. The company operates in the Financials 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 through independent agencies and brokers. The Personal Insurance segment offers property and casualty insurance covering personal risks, primarily automobile and homeowners insurance to individuals 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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