Shares of The Travelers Companies, Inc. TRV closed at $265.13 on Monday, near its 52-week high of $269.56, after gaining 10% year to date. Shares of TRV have outperformed the Finance sector and the Zacks S&P 500 composite index but lagged the industry in the same time frame.
TRV, one of the leading writers of auto and homeowners’ insurance plus commercial U.S. property-casualty insurance, has a market capitalization of $60 billion. The average volume of shares traded in the last three months was 1.3 million.
TRV vs. Industry, Sector & S&P 500 Year to Date
Image Source: Zacks Investment Research
TRV shares are trading well above the 50-day simple moving average (SMA), indicating a bullish trend. The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as it is the first marker of an uptrend or downtrend.
TRV Shares are Expensive
TRV shares are trading at a premium to the industry. Its price-to-book value of 2.16X is higher than the industry average of 1.61X.
Image Source: Zacks Investment Research
Shares of other insurers like The Allstate Corporation ALL, Chubb Limited CB and The Progressive Corporation PGR are also trading at a multiple higher than the industry average.
Travelers’ Favorable Return on Capital
Return on equity (ROE) for the trailing 12 months was 19.1%, comparing favorably with the industry’s 8.3%. This reflects its efficiency in utilizing shareholders’ funds. Sustained operational excellence helped generate double-digit core ROE in nine out of the last 10 years. Travelers aims to generate mid-teens core ROE over time.
Also, return on invested capital (ROIC) has been increasing over the last few quarters, with the company raising its capital investment over the same time frame. This reflects TRV’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 10.9%, better than the industry average of 6.4%.
Bearish Analyst Sentiment on TRV
The Zacks Consensus Estimate for 2025 earnings has moved down 6.4% in the past 30 days, while the same for 2026 has moved down 1.8% in the same time frame.
Growth Projections
The Zacks Consensus Estimate for 2025 earnings stands at $16.91, suggesting a decrease of 21.6% despite 7.4% higher revenues of $49.9 billion. The consensus estimate for 2026 earnings stands at $22.68, suggesting an increase of 34.1% on 6.1% higher revenues of $52.9 billion.
The long-term earnings growth rate is expected to be 3%, lagging the industry average of 8%.
Factors Favoring Travelers
Travelers’ solid retention, better pricing, increased new business and positive renewal premium change poise it well for growth. The insurer’s compelling product portfolio consists of coverages across nine lines of business.
Successful execution of growth strategies and stability in the markets where it operates is set to drive TRV’s auto and homeowners business, as well as commercial businesses.
Higher returns from the non-fixed income portfolio have been driving investment income over the last four years amid a low-interest rate environment. Travelers estimates fixed-income NII, including earnings from short-term securities, to be $3 billion in 2025, with $710 million in the first quarter of 2025 and growth to $790 million in the fourth quarter. This insurer expects the $100 billion investment portfolio should continue generating a higher level of predictable and reliable net investment income.
Travelers has a conservative balance sheet among its peers. The insurer remains focused on keeping the debt-to-capital ratio between 15 and 25 and has been increasing its book value for the past 10 years. TRV had $5.04 billion remaining under repurchase authorization at 2024 end.
Average Target Price for TRV Suggests an Upside
Based on short-term price targets offered by 22 analysts, the Zacks average price target is $271.09 per share. The average suggests a potential 3.9% upside from the last closing price.
Parting Thoughts on TRV
Travelers’ strong market presence in auto, homeowners’ insurance and commercial U.S. property-casualty insurance poise it well for growth. Its inorganic growth story too impresses. Strong renewal rate change, retention and increase in new business supported by a compelling portfolio and solid capital position should continue to drive earnings.
Travelers has been hiking dividends for the last 20 years. Its dividend yield of 1.8% appears attractive compared with the industry average of 0.3%, making it an attractive pick for yield-seeking investors.
However, by its nature of operations, TRV’s results are vulnerable to catastrophe loss. The insurer estimates losses stemming from the California wildfire to have a significant impact on its first-quarter 2025 earnings.
Also, Travelers has been witnessing a rise in expenses over the past many years owing to an increase in claims and claim adjustment expenses as well as general and administrative expenses. The company expects the expense ratio to be around 28.5% in 2025.
A decline in 2025's bottom-line projection and bearish analysts’ sentiment keeps us cautious about this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Today, See These 5 Potential Home Runs >>The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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