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TRV Stock Trades Below 50-Day SMA: Should You Still Buy It?
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The Travelers Companies, Inc. (TRV - Free Report) has been trading below its 50-day simple moving average (SMA), signaling a short-term bearish trend. As of Jan. 14, 2025, its share price was $236.93, down 12.1% from its 52-week high of $269.56
The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend.
With a market capitalization of $53.8 billion, Travelers is one of the leading writers of auto and homeowners’ insurance plus commercial U.S. property-casualty insurance. Travelers is set to gain from continued strong renewal rate change and retention and increase in new business.
TRV Trading Below 50-Day Moving Average
Image Source: Zacks Investment Research
TRV is an Outperformer
Shares of Travelers have gained 8.8% in the past six months, outperforming its industry’s increase of 1.7%, the sector’s rise of 4.2% and the Zacks S&P 500 composite’s gain of 3.5% in the same time frame.
TRV Vs. Industry, Sector and S&P 500 in 6 Months
Image Source: Zacks Investment Research
Based on short-term price targets offered by 22 analysts, the Zacks average price target is $268.50 per share. The average suggests a potential 15.1% upside from Tuesday’s closing price.
Travelers’ Favorable Return on Capital
Return on equity (ROE) for the trailing 12 months was 17.7%, comparing favorably with the industry’s 7.6%. This reflects its efficiency in utilizing shareholders’ funds. Sustained operational excellence helped generate double-digit core ROE in nine out of the last 10 years. Travelers aims to generate mid-teens core ROE over time.
Also, return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame. This reflects TRV’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 9.9%, better than the industry average of 5.8%.
Optimistic Analyst Sentiment Instills Confidence in TRV
The Zacks Consensus Estimate for 2025 earnings stands at $20.54, suggesting an increase of 8.7% on 7.5% higher revenues of $49.8 billion.
The long-term earnings growth rate is expected to be 11.2%, in line with the industry average. The company has a Growth Score of B.
The consensus estimate for 2025 earnings has moved 4 cents north in the past 30 days, reflecting analyst optimism.
Factors Impacting Travelers
Travelers’ solid retention, better pricing, increased new business and positive renewal premium change poise it well for growth. The insurer’s compelling product portfolio consists of coverages across nine lines of business. The company’s personal lines of business should benefit from continued growth at the profitable agency auto and homeowners business while the commercial businesses is set to grow on the successful execution of growth strategies and stability in the markets where it operates.
The Fed cut its interest rate three times in 2024 and hinted at two more in 2025. The timing is still not clear as inflation is still above the Fed’s targeted inflation of 2%. Higher returns from the non-fixed income portfolio have likely been driving investment income over the last four years. Travelers estimates NII, including earnings from short-term securities, to be $2.9 billion in 2025, with $700 million in the first quarter of 2025 and growing to approximately $760 million by the fourth quarter of 2025.
Travelers has a conservative balance sheet among its peers. It engages in effective capital deployment, including distributing wealth to shareholders. The insurer remains focused on keeping the debt-to-capital ratio between 15 and 25 and has been increasing its book value for the past 10 years.
About 10.4% of Travelers’ direct written premiums in 2024 came from California. Thus, the wildfire that is still raging on will likely weigh on its underwriting profitability. Though the insurer is yet to estimate its losses from the wildfire, in May 2024, Travelers had increased its insurance rates in California by an average of 15%, attributable to wildfire risks, inflation and escalating reinsurance costs.
TRV Shares Are Expensive
Its shares are trading at a premium to the Zacks Property and Casualty Insurance industry. Its price-to-book value of 1.94X is higher than the industry average of 1.49X.
The company has a Value Score of A. This style score helps find the most attractive value stocks. Back-tested results have shown that stocks with a Growth Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer better returns.
Shares of other insurers like The Allstate Corporation (ALL - Free Report) , Chubb Limited (CB - Free Report) and The Progressive Corporation (PGR - Free Report) are also trading at a multiple higher than the industry average.
Parting Thoughts on TRV Shares
Travelers has a strong market presence in auto, homeowners’ insurance and commercial U.S. property-casualty insurance with solid inorganic growth. Strong renewal rate change, retention and increase in new business supported by a compelling portfolio and solid capital position should continue to drive earnings.
Travelers’ dividend history is impressive. It hiked dividends for the last 20 years. Its dividend yield of 1.8% appears attractive compared with the industry average of 0.3%, making it an attractive pick for yield-seeking investors. The insurer also engages in regular buybacks.
A solid VGM Score of A and its target price, which indicates a potential upside, instill confidence. Thus, despite its premium valuation, and exposure to catastrophes, this Zacks Rank #1 stock remains one of investors’ favorites for addition to their portfolios.
Image: Bigstock
TRV Stock Trades Below 50-Day SMA: Should You Still Buy It?
The Travelers Companies, Inc. (TRV - Free Report) has been trading below its 50-day simple moving average (SMA), signaling a short-term bearish trend. As of Jan. 14, 2025, its share price was $236.93, down 12.1% from its 52-week high of $269.56
The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend.
With a market capitalization of $53.8 billion, Travelers is one of the leading writers of auto and homeowners’ insurance plus commercial U.S. property-casualty insurance. Travelers is set to gain from continued strong renewal rate change and retention and increase in new business.
TRV Trading Below 50-Day Moving Average
Image Source: Zacks Investment Research
TRV is an Outperformer
Shares of Travelers have gained 8.8% in the past six months, outperforming its industry’s increase of 1.7%, the sector’s rise of 4.2% and the Zacks S&P 500 composite’s gain of 3.5% in the same time frame.
TRV Vs. Industry, Sector and S&P 500 in 6 Months
Image Source: Zacks Investment Research
Based on short-term price targets offered by 22 analysts, the Zacks average price target is $268.50 per share. The average suggests a potential 15.1% upside from Tuesday’s closing price.
Travelers’ Favorable Return on Capital
Return on equity (ROE) for the trailing 12 months was 17.7%, comparing favorably with the industry’s 7.6%. This reflects its efficiency in utilizing shareholders’ funds. Sustained operational excellence helped generate double-digit core ROE in nine out of the last 10 years. Travelers aims to generate mid-teens core ROE over time.
Also, return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame. This reflects TRV’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 9.9%, better than the industry average of 5.8%.
Optimistic Analyst Sentiment Instills Confidence in TRV
The Zacks Consensus Estimate for 2025 earnings stands at $20.54, suggesting an increase of 8.7% on 7.5% higher revenues of $49.8 billion.
The long-term earnings growth rate is expected to be 11.2%, in line with the industry average. The company has a Growth Score of B.
The consensus estimate for 2025 earnings has moved 4 cents north in the past 30 days, reflecting analyst optimism.
Factors Impacting Travelers
Travelers’ solid retention, better pricing, increased new business and positive renewal premium change poise it well for growth. The insurer’s compelling product portfolio consists of coverages across nine lines of business.
The company’s personal lines of business should benefit from continued growth at the profitable agency auto and homeowners business while the commercial businesses is set to grow on the successful execution of growth strategies and stability in the markets where it operates.
The Fed cut its interest rate three times in 2024 and hinted at two more in 2025. The timing is still not clear as inflation is still above the Fed’s targeted inflation of 2%. Higher returns from the non-fixed income portfolio have likely been driving investment income over the last four years. Travelers estimates NII, including earnings from short-term securities, to be $2.9 billion in 2025, with $700 million in the first quarter of 2025 and growing to approximately $760 million by the fourth quarter of 2025.
Travelers has a conservative balance sheet among its peers. It engages in effective capital deployment, including distributing wealth to shareholders. The insurer remains focused on keeping the debt-to-capital ratio between 15 and 25 and has been increasing its book value for the past 10 years.
About 10.4% of Travelers’ direct written premiums in 2024 came from California. Thus, the wildfire that is still raging on will likely weigh on its underwriting profitability. Though the insurer is yet to estimate its losses from the wildfire, in May 2024, Travelers had increased its insurance rates in California by an average of 15%, attributable to wildfire risks, inflation and escalating reinsurance costs.
TRV Shares Are Expensive
Its shares are trading at a premium to the Zacks Property and Casualty Insurance industry. Its price-to-book value of 1.94X is higher than the industry average of 1.49X.
The company has a Value Score of A. This style score helps find the most attractive value stocks. Back-tested results have shown that stocks with a Growth Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer better returns.
Shares of other insurers like The Allstate Corporation (ALL - Free Report) , Chubb Limited (CB - Free Report) and The Progressive Corporation (PGR - Free Report) are also trading at a multiple higher than the industry average.
Parting Thoughts on TRV Shares
Travelers has a strong market presence in auto, homeowners’ insurance and commercial U.S. property-casualty insurance with solid inorganic growth. Strong renewal rate change, retention and increase in new business supported by a compelling portfolio and solid capital position should continue to drive earnings.
Travelers’ dividend history is impressive. It hiked dividends for the last 20 years. Its dividend yield of 1.8% appears attractive compared with the industry average of 0.3%, making it an attractive pick for yield-seeking investors. The insurer also engages in regular buybacks.
A solid VGM Score of A and its target price, which indicates a potential upside, instill confidence. Thus, despite its premium valuation, and exposure to catastrophes, this Zacks Rank #1 stock remains one of investors’ favorites for addition to their portfolios.
You can see the complete list of today’s Zacks #1 Rank stocks here.