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What’s in Store for Travelers (TRV) this Earnings Season?


The Travelers Companies, Inc. TRV is slated to report first-quarter 2017 results on Apr 20, before the market opens. Last quarter, the company had a positive earnings surprise of 21.67%. Let’s see how things are shaping up for this announcement.

Factors to be Considered this Quarter

Travelers is likely to have witnessed net premium growth in its Business and International Insurance, Bond & Specialty Insurance and Personal Insurance businesses in the to-be-reported quarter. This in turn is likely to have added to the top line.

Policies in force and retention rate are likely to have remained healthy. Continued buybacks should have boosted the bottom line.

Underwriting results are expected to have benefited from a benign catastrophic environment.

However, net investment income is likely to have deteriorated owing to the still low interest rate environment. The company projects about $15–$20 million decrease in after tax net investment income on a quarterly basis in 2017, compared with the corresponding period in 2016.

With respect to the surprise trend, the company delivered positive surprises in three of the last four quarters with an average beat of 4.34%.

The Travelers Companies, Inc. Price and EPS Surprise

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

Earnings Whispers

Our proven model does not conclusively show that Travelers is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Travelers has an Earnings ESP of -1.68%. This is because the Most Accurate estimate is pegged at $2.34, while the Zacks Consensus Estimate stands at $2.38. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Travelers carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, we need a positive Earnings ESP to be confident about an earnings beat.

Conversely, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

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

Everest Re Group, Ltd. RE, which is set to report first-quarter earnings on Apr 24, has an Earnings ESP of +2.47% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chubb Limited CB has an Earnings ESP of +0.82% and a Zacks Rank #3. The company is set to report first-quarter earnings on Apr 25.

Selective Insurance Group, Inc. SIGI has an Earnings ESP of +9.59% and a Zacks Rank #2. The company is slated to report first-quarter earnings on Apr 26.

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