TRV Stock Moves Above 200-Day SMA: Buy, Sell or Stay Invested?

Shares of The Travelers Corporation TRV have gained momentum. The stock is trading above its 200-day simple moving average (SMA), signaling a bullish trend.

The 200-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as it is a marker of an uptrend or a downtrend.

TRV's 200-Day SMA
 

Based on short-term price targets offered by 22 analysts, the Zacks average price target is $300.68 per share. The average suggests a potential 6.2% upside from the last closing price.

TRV shares have gained 16.6% in a year, outperforming the industry’s growth of 7.7%. With a market capitalization of $64 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 a continued strong renewal rate change, retention, and an increase in new business. 

TRV Vs. Industry, Sector and S&P 500 in a Year

The Allstate Corporation ALL and Chubb Limited CB, its peers, gained 8% and 15%, respectively, in the same time frame.

TRV Shares are Expensive

The stock is undervalued compared with its industry. It is currently trading at a price-to-book multiple of 2, higher than the industry average of 1.52 but below the median of 2.05.  

TRV is relatively expensive compared with Chubb but cheap compared with Allstate.

Muted Analyst Sentiment

The Zacks Consensus Estimate for 2026 revenues indicates a 3.4% year-over-year increase, while the same for earnings implies a 6.7% year-over-year decrease. 

The consensus estimate for 2026 earnings has moved 1 cent south in the past 30 days.
 

While the consensus estimate for 2026 earnings of ALL witnessed southward movement in the last 30 days, that for CB moved north in the same time frame.

Factors Impacting Travelers

Auto insurance premiums have been rising due to higher repair costs, adverse driving behavior, increased litigation and greater claims frequency. However, premium growth is expected to moderate as insurers enhance underwriting discipline and introduce more customized, competitively priced policies. The homeowners insurance market continues to face headwinds from catastrophic natural and man-made losses, insurer withdrawals from high-risk regions, and elevated premiums. Despite these challenges, Travelers remains confident about its personal lines outlook, supported by tighter underwriting standards, improving claims trends, and increased bundling of auto and home policies to improve affordability.

Travelers’ investment income has grown steadily over the past five years, driven by strong returns from its expanding fixed-income portfolio and improved performance from non-fixed income investments. As a property-casualty insurer, Travelers favors fixed-income securities for stable and predictable cash flows to support claims payments. Approximately 94% of its investment portfolio is allocated to fixed maturities and short-term investments.

In line with the insurance industry’s digital transformation, Travelers has adopted advanced technologies such as artificial intelligence, the Internet of Things, data analytics, and cloud computing to strengthen underwriting, claims processing, customer experience and risk management.

The company maintains a strong balance sheet, with statutory capital and surplus of $29.965 billion at the end of the third quarter. Travelers has increased its book value consistently over the past decade and achieved double-digit core return on equity in nine of the last 10 years, averaging 12.6%. Management targets mid-teens core ROE over the long term.

Robust cash generation has enabled sustained shareholder returns through dividends and share repurchases. Travelers has increased its dividend for 21 consecutive years, with an 8% compound annual growth rate, and its current dividend yield of 1.6% exceeds the industry average of 0.3%. Nevertheless, rising reinsurance costs, inflationary pressure, tariffs and reduced demand in commercial lines pose risks to underwriting margins and overall profitability.

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. The insurer also engages in regular buybacks. A solid VGM Score of A and its target price, which indicates a potential upside, instill confidence. 

Given premium valuation and muted analyst sentiment, we maintain a wait-and-watch approach on this Zacks Rank #3 (Hold) stock. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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