Travelers Earnings Preview: Second Quarter 2009

The Travelers Companies [[TRV]] is scheduled to report their second quarter 2009 results before the market opens on Thursday, July 30. Based on our analysis, we at are expecting TRV to report better than expected results that exceed Wall Street’s consensus expectations.


Analyst Expectations

We are forecasting revenues of $6.32 billion and EPS of $1.30. This would represent essentially no change in revenues from last year’s $6.30 billion in the same period. The current analyst consensus estimates calls for revenues of $6.17 billion and EPS of $1.28. On April 30, the company reiterated its full year 2009 guidance of $4.50 – $4.90 EPS.


New Dow component Travelers has continued to gain market share despite the current economic recession. The company continues to benefit from its size and scale that is attracting new customers who are worried about the financial stability of some of Traveler’s competitors.


The Travelers Companies appears to offer one of the safer options for investors looking at the financial sector. The company continues to post solid earnings, it offers a decent dividend and is taking market share from its weaker competitors.


Share Performance

Since the beginning of the year, Traveler’s shares have declined 5%. In 2008, TRV’s shares fell only 16% and easily outperformed the 34% decline in the Dow Jones industrial average.



Shares are now trading at 8x consensus 2010 EPS estimates. This is a discount to the relative valuations of their peer group. Traveler’s appears to be attractively valued and offers investors a relatively safe option within the financial sector.


Recommendation: Buy with a $50 price target.


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