TRV Outperforms Industry, Trades at Premium: Should You Buy the Stock?

Shares of The Travelers Companies, Inc. TRV have gained 16.1% in the year-to-date period, outperforming its industry, the Finance sector, and the Zacks S&P 500 composite’s growth of 8.5%, 13.5% and 16%, respectively. 

The insurer has a market capitalization of $62.41 billion. The average volume of shares traded in the last three months was 1.2 million.

TRV Trading Above 50-Day and 200-Day Moving Averages

Shares of Travelers closed at $279.81 on Friday and are trading above the 50-day and 200-day simple moving averages (SMA) of $274.23 and $263.55, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.

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 1.98X is higher than the industry average of 1.56X.

The company has a Value Score of B. This style score helps find the most attractive value stocks. 

Shares of other insurers like The Allstate Corporation ALL, W.R. Berkley Corporation WRB, and The Progressive Corporation PGR are also trading at a multiple higher than the industry average.

TRV’s Growth Projection Encourages

The Zacks Consensus Estimate for Travelers’ 2025 revenues is pegged at $48.83 billion, implying a year-over-year improvement of 5.1%. 
The consensus estimate for 2026 earnings per share and revenues indicates an increase of 5.8% and 3.4%, respectively, from the corresponding 2025 estimates. TRV has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company. 

Travelers beat earnings estimates in each of the past four quarters, with an average surprise of 89.26%.

Optimist Analyst Sentiment on TRV

Eight of the 13 analysts covering the stock have raised estimates for 2025 and for 2026 over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has moved up 13.1% and 5.5%, respectively, in the past 30 days.

Average Target Price for TRV Suggests Upside

Based on short-term price targets offered by 21 analysts, the Zacks average price target is $298.19 per share. The average suggests a potential 7.9% upside from the last closing price.

Travelers’ Favorable Return on Capital

Return on equity (ROE) for the trailing 12 months was 20.8%, which compared 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 12%, better than the industry average of 5.9%.

Factors Favoring Travelers

Travelers is poised for growth, driven by solid retention rates, favorable pricing, an uptick in new business and positive renewal premium trends. The company’s broad product portfolio, covering nine distinct lines of business, provides extensive coverage options. 

Continued execution of strategic growth initiatives, combined with stable market environments, is expected to support the expansion of TRV’s auto, homeowners, and commercial insurance segments. To solidify its competitive advantage in the Bond & Specialty segment, it plans to launch products in 2025. 

Higher returns from the non-fixed income portfolio have been driving investment income over the last four years amid a low-interest-rate environment. The insurer expects the $100 billion investment portfolio to continue generating a higher level of predictable and reliable net investment income. TRV now expects fixed income NII of approximately $810 million after tax in the fourth quarter. For 2026, TRV expects fixed income NII of more than $3.3 billion.

Net margin has improved 170 basis points over the last two years on prudent underwriting.

Travelers has a conservative balance sheet among its peers. 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. TRV had $3.67 billion remaining under repurchase authorization at third-quarter 2025 end.

Final Take on TRV

Travelers’ strong presence in auto, homeowners, and commercial U.S. property-casualty insurance provides a solid foundation for future growth. An impressive history of inorganic expansion strengthens its position. Continued momentum in renewal rate improvements, high retention levels and increased new business, supported by a well-diversified portfolio and solid capital strength, is likely to sustain its earnings growth.

Travelers has been hiking dividends for the last 21 years. Its dividend yield of 1.57% appears attractive compared with the industry average of 0.2%, making it an attractive pick for yield-seeking investors. Its VGM Score of B instills confidence. Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best opportunities in the value investing space.

Thus, despite its premium valuation, this Zacks Rank #1 stock is worth adding to your portfolio. You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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