Markets

Travelers (TRV) to Report Q3 Earnings: What's in Store?

The Travelers Companies, Inc. TRV is slated to report third-quarter 2020 results on Oct 20, before market open. The company reported in line earnings in the last reported quarter.

Factors at Play

Travelers’ third-quarter premiums are likely to have increased across its segments on better pricing, strong retention level and positive renewal premium change, partially offset by coronavirus-led challenges. The Zacks Consensus Estimate for premiums is pegged at $7.2 billion, indicating an upside of 0.6% from third-quarter 2019 reported figure.

Successful execution of marketplace strategies and investments are likely to have boosted commercial businesses. Continued growth at the profitable agency auto and homeowners business is likely to have aided personal lines of business.

A low interest rate environment might have weighed on investments. The company expects fixed income net investment income to decline $35 million to $40 million in the third quarter.

The company is likely to have benefited from declining claims amid a reduction in the number of vehicles plying on roads due to the COVID-19 pandemic.

The third quarter of a year generally bears the brunt of catastrophes as the hurricane season typically starts in June and lasts through November, gathering strength in August and September. Travelers had exposure in areas where Hurricane Laura made landfall. Thus, underwriting profitability might have been affected.

The company estimates its expense ratio to remain high. The Zacks Consensus Estimate for underwriting expense ratio stands at 30.87, an increase of 137 basis points.

The Zacks Consensus Estimate for earnings is pegged at $2.94, indicating 105.6% increase from the year-ago figure on 0.3% higher revenues of $8 billion.

The Travelers Companies, Inc. Price and EPS Surprise The Travelers Companies, Inc. Price and EPS Surprise

The Travelers Companies, Inc. price-eps-surprise | The Travelers Companies, Inc. Quote

What Our Quantitative Model Unveils

Our proven model does not show that Travelers is likely to beat on earnings in the to-be-reported quarter. This is because the stock needs to have the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This is not the case as you can see below

Earnings ESP: Travelers has an Earnings ESP of -11.91%. This is because the Most Accurate Estimate is pegged at $2.59, lower than the Zacks Consensus Estimate of $2.94. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Travelers currently carries a Zacks Rank #5 (Strong Sell).

Key Picks

Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

Arch Capital Group ACGL has an Earnings ESP of +8.11% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Watford Holdings WTRE has an Earnings ESP of +70.13% and a Zacks Rank #3.

CNO Financial Group CNO has an Earnings ESP of +2.52% and a Zacks Rank of 3.

Legal Marijuana: An Investor’s Dream

Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.

Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.

Download Marijuana Moneymakers FREE >>
 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
The Travelers Companies, Inc. (TRV): Free Stock Analysis Report
 
CNO Financial Group, Inc. (CNO): Free Stock Analysis Report
 
Arch Capital Group Ltd. (ACGL): Free Stock Analysis Report
 
Watford Holdings Ltd. (WTRE): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

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

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More