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The emblem of Travelers Insurance Co. is displayed on the company’s Hartford office building… [+] On Friday, February 6, 2015, in Connecticut, United States. According to a report released Tuesday by Standard & Poor’s, Obamacare’s startup health insurance plans are flirting with financial hardship, with all but five of the 23 nonprofit firms reporting negative cash flow from operations in the first three quarters of 2014. (C) 2015, Ron Antonelli/Bloomberg, photographer Bloomberg Finance LP is a financial services firm based in New York
On Tuesday, July 20, Travelers (NYSE: TRV) will release its fiscal Q2 2021 results. Travelers is expected to outperform the market in terms of revenue and profitability. The insurance behemoth beat revenue and earnings projections in the most recent quarter, owing to rising net investment income. Growth in investable assets boosted net investment income, which was somewhat offset by interest rate headwinds. Furthermore, despite lower revenues in the business insurance division, the company’s insurance premiums improved marginally in the quarter due to some rebound in the bond & speciality and personal insurance segments. The premiums and net investment income growth are expected to fuel the second-quarter results. According to our estimates, Travelers is worth roughly $162 per share, which is 5% more than the current market price of $155. For more information, see our interactive dashboard analysis of travelers’ pre-earnings: What To Expect in Q2?
(1) Revenues in Q2 are projected to exceed consensus expectations.
Travelers’ fiscal Q2 2021 revenues are expected to be around $8.18 billion, up 6% from the average forecast of $7.72 billion, according to Trefis. Its revenues of $32 billion in 2020 were somewhat higher than in 2019, owing to slower premium growth and a 10% drop in net investment income year over year. While the reduced interest rate environment hurt net investment income in 2020, total premiums fell due to a shift in consumer focus from long-term to short-term survivability as a result of the Covid-19 crisis. However, premiums and net investment income have improved in recent quarters, with net investment income up 15% year over year in Q1. The personal and Bond & Specialty insurance streams have both improved, which has boosted premiums. In the second quarter of FY2021, we expect the same trend to continue.
With a recovery in the economy, total premiums are expected to improve in FY2021. Furthermore, growth in investable assets will likely boost net interest income, which will be slightly offset by low interest rates. Interest rates are unlikely to return to pre-Covid-19 levels in the near future. In FY2021, the TRV’s revenues are expected to stay around $33.4 billion. More information about Travelers’ segments can be seen in our revenue dashboard.
2) Earnings per share are expected to exceed consensus projections.
According to Trefis, Travelers’ adjusted earnings per share for the second quarter of 2021 will be $2.55, over 9% more than the consensus forecast of $2.33. In 2020, the company’s adjusted net income increased by 3% year over year to $2.7 billion, with EPS rising from $9.92 to $10.52. This may be due to a little drop in overall claims and expenses as a percentage of income. The company reported a 22 percent increase in adjusted net income in the first quarter, owing to lower operating expenses as a percentage of revenues. We expect the second-quarter results to be driven by the same momentum.
ADDITIONAL INFORMATION FOR YOU
Revenues from travelers are predicted to increase by 4% year over year in FY2021. In addition, the net income margin is expected to rise somewhat this year. TRV will be able to record an EPS of roughly $11.65 as a result of this.
(3) Estimated stock price is 5% higher than actual market pricing.
With an EPS forecast of about $11.65 and a P/E multiple of roughly 14x in fiscal 2021, our Travelers valuation corresponds to a price of $162, which is 6% higher than the current market price of around $155.
Note: P/E Multiples are calculated using the closing share price and reported (or predicted) Adjusted Earnings for the entire year.

Trefis EPS
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