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The Travelers Companies, Inc. (NYSE:TRV): Poised For Long-Term Success?

Simply Wall St

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The latest earnings release The Travelers Companies, Inc.'s (NYSE:TRV) announced in December 2018 showed that the business benefited from a robust tailwind, leading to a double-digit earnings growth of 23%. Below, I've laid out key numbers on how market analysts view Travelers Companies's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

View our latest analysis for Travelers Companies

Market analysts' prospects for this coming year seems optimistic, with earnings expanding by a robust 17%. This growth seems to continue into the following year with rates reaching double digit 20% compared to today’s earnings, and finally hitting US$3.0b by 2022.

NYSE:TRV Past and Future Earnings, April 2nd 2019

Even though it’s informative understanding the rate of growth each year relative to today’s value, it may be more insightful to determine the rate at which the earnings are moving on average every year. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Travelers Companies's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 6.8%. This means, we can expect Travelers Companies will grow its earnings by 6.8% every year for the next couple of years.

Next Steps:

For Travelers Companies, I've compiled three relevant aspects you should look at:

  1. 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.
  2. Valuation: What is TRV 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 TRV is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TRV? 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 editorial-team@simplywallst.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.