After The Travelers Companies, Inc.’s (NYSE:TRV) earnings announcement on 31 December 2018, analysts seem fairly confident, with earnings expected to grow by 17% in the upcoming year against the past 5-year average growth rate of -12%. By 2020, we can expect Travelers Companies’s bottom line to reach US$2.9b, a jump from the current trailing-twelve-month of US$2.5b. Below is a brief commentary around Travelers Companies’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Exciting times ahead?
Over the next three years, it seems the consensus view of the 14 analysts covering TRV is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of US$2.5b and the final forecast of US$3.0b by 2022, the annual rate of growth for TRV’s earnings is 7.0%. This leads to an EPS of $12.56 in the final year of projections relative to the current EPS of $9.36. Margins are currently sitting at 8.3%, which is expected to expand to 10.0% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Travelers Companies, I’ve put together three essential aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Travelers Companies worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Travelers Companies is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Travelers Companies? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.