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Is Travelers (TRV) Poised to Beat This Earnings Season?

We expect property and casualty insurer The Travelers Companies, Inc . TRV to beat expectations when it reports third-quarter results on Oct 21 before the market opens.

Why a Likely Positive Surprise?

Our proven model shows that Travelers Companies has the right combination of two key ingredients.

Zacks ESP : Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +4.98%. This is because the Most Accurate estimate of $2.32 is higher than the Zacks Consensus Estimate of $2.21. The positive ESP is a meaningful indicator of a likely positive earnings surprise for the company.

Zacks Rank: Travelers Companies carries a Zacks Rank #1 (Strong Buy). Note that stocks with a Zacks Rank of #1, 2 or 3 have a significantly higher chance of beating earnings.

The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

What is Driving the Better-Than-Expected Earnings?

Premiums written by Travelers in the to-be reported are expected to have been favored by a prudent pricing strategy. Efforts to write new business that meet target returns will aid the upside.

With an impressive inorganic story, acquisitions too will back Travelers' performance in the to-be reported quarter. The company acquired the majority stake in the property casualty business of its J. MalucelliParticipaçõesemSeguros e Resseguros S.A. joint venture in Brazil. Additionally, in association with J. Malucelli, Travelers acquired a majority stake in Cardinal Compañía de Seguros, a Colombian startup surety provider.

Underwriting results will be favored by not-so active catastrophe activities.

Margins are likely to have been boosted by costs saved from expense reduction initiatives.

Continued share buyback is likely to have lowered share count and leave a favorable impact on the bottom line.

Travelers Companies delivered earnings surprises in three of last four quarters, with an average beat of 14.42%.

Stocks to Consider

Here are some companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

The Chubb Corp. CB , Earnings ESP of +3.57% and a Zacks Rank #1. The company is expected to report its third-quarter earnings on Oct 21.

Arch Capital Group Ltd. ACGL , Earnings ESP of +3.57% and a Zacks Rank #2 (Buy). The company is expected to report its third-quarter earnings on Oct 28.

AXIS Capital Holdings Limited AXS , Earnings ESP of +1.18% and a Zacks Rank #2. The company is expected to report its third-quarter earnings on Oct 27.

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TRAVELERS COS (TRV): Free Stock Analysis Report

CHUBB CORP (CB): Free Stock Analysis Report

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ARCH CAP GP LTD (ACGL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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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