Travelers currently trades at $294.96 per share and has shown little upside over the past six months, posting a middling return of 2.7%. The stock also fell short of the S&P 500’s 9.9% gain during that period.
Given the weaker price action, is now a good time to buy TRV? Or should investors expect a bumpy road ahead? Find out in our full research report, it’s free.
Why Does Travelers Spark Debate?
Tracing its roots back to 1853 when it insured travelers against accidents on steamboats and railroads, Travelers (NYSE: TRV) provides a wide range of commercial and personal property and casualty insurance products to businesses, government units, associations, and individuals.
Two Things to Like:
1. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Travelers’s EPS grew at 26% compounded annual growth rate over the last five years, higher than its 8.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
2. Projected BVPS Growth Is Remarkable
Book value per share (BVPS) growth comes from an insurer’s ability to price risk appropriately and invest premiums profitably.
Over the next 12 months, Consensus estimates call for Travelers’s BVPS to grow by 22% to $167.39, elite growth rate.
One Reason to be Careful:
Net Premiums Earned Point to Soft Demand
Insurers sell policies then use reinsurance (insurance for insurance companies) to protect themselves from large losses. Net premiums earned are therefore what's collected from selling policies less what’s paid to reinsurers as a risk mitigation tool.
Travelers’s net premiums earned has grown at a 5.9% annualized rate over the last two years, worse than the broader insurance industry and in line with its total revenue.
Final Judgment
Travelers’s merits more than compensate for its flaws. With its shares lagging the market recently, the stock trades at 1.8× forward P/B (or $294.96 per share). Is now a good time to initiate a position? See for yourself in our in-depth research report, it’s free.
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