Travelers Gears Up to Report Q3 Earnings: What's in the Cards?

The Travelers Companies, Inc. TRV is set to report third-quarter 2024 earnings on Oct. 17. TRV delivered an earnings surprise in two of the last four quarters and missed twice, the average beat being 7.47%.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Factors to ConsiderTravelers’ third-quarter results are likely to benefit from solid performance across its three segments.Better pricing, solid renewal rate change, strong retention and exposure growth are likely to have aided premiums in the to-be-reported quarter. The Zacks Consensus Estimate is currently pegged at $10.5 billion, indicating an increase of 8.9% from the year-ago reported number. We estimate premiums to increase 8.6% to $10.5 billion.Investment results are likely to benefit from a higher long-term average yield, a higher average level of fixed maturity investments, reliable terms from growing fixed income portfolio and higher returns from non-fixed income portfolio. The Zacks Consensus Estimate is currently pegged at $883 million, implying an increase of 14.8% from the year-ago reported number. We estimate net investment income to increase 13% to $868.7 million.The Personal Insurance segment is likely to have benefited from increases in the automobile and homeowners and other product lines, strong retention rates and positive renewal premium changes. The Zacks Consensus Estimate is currently pegged at $4.2 billion, indicating an increase of 10.2% from the year-ago reported number. We estimate earned premiums at Personal Insurance to be $4 billion, suggesting an improvement of 7% from the year-ago reported figure.An increase in net written premiums coupled with higher net investment income and other revenues is likely to have aided the top line in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is currently pegged at $11.68 billion, indicating a 9.1% increase from the year-ago reported figure.Despite catastrophe losses, better pricing and increased exposure, coupled with prudent underwriting, are expected to have aided underwriting profitability, which, in turn, is expected to have led to an improvement in the combined ratio. We estimate the combined ratio to be 100.3. The Zacks Consensus Estimate is currently pegged at 98, indicating an improvement of 300 basis points from the year-ago reported number.However, expenses are expected to have risen on higher claims and claim adjustment expenses, amortization of deferred acquisition costs, general and administrative expenses, as well as interest expenses. We estimate expenses to increase 4.1% in the to-be-reported quarter to $10.6 billion. Continued share buybacks are anticipated to have provided an additional boost to the bottom line.The Zacks Consensus Estimate for third-quarter 2024 earnings per share is pegged at $3.76, suggesting an increase of 92.8% from the year-ago reported figure.What the Zacks Model UnveilsOur proven model does not conclusively predict an earnings beat for Travelers this time around. This is because a stock needs to have the right combination of a positive Earnings ESP and a 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 -9.26%. This is because the Most Accurate Estimate of $3.41 is pegged lower than the Zacks Consensus Estimate of $3.76. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.The Travelers Companies, Inc. Price and EPS Surprise The Travelers Companies, Inc. price-eps-surprise | The Travelers Companies, Inc. QuoteZacks Rank: Travelers currently carries a Zacks Rank #3.Stocks to ConsiderHere are three P&C insurance stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:Arch Capital Group ACGL has an Earnings ESP of +5.14% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for third-quarter 2024 earnings is pegged at $1.82, indicating a year-over-year decrease of 21.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.ACGL’s earnings beat estimates in each of the last four reported quarters.First American Financial FAF has an Earnings ESP of +1.77% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for third-quarter 2024 earnings is pegged at $1.15, indicating a year-over-year decrease of 5.7%.FAF’s earnings beat estimates in two of the last four reported quarters while missing in the other two.American Financial Group, Inc. AFG has an Earnings ESP of +1.91% and carries a Zacks Rank of 3 at present. The Zacks Consensus Estimate for third-quarter 2024 earnings is pegged at $2.51, implying an increase of 2.4% from the year-ago quarter's reported figure.AFG’s earnings beat estimates in two of the last four reported quarters while missing in the other two.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>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 First American Financial Corporation (FAF): Free Stock Analysis Report American Financial Group, Inc. (AFG): Free Stock Analysis Report Arch Capital Group Ltd. (ACGL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks