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Did The Travelers Companies, Inc.'s (NYSE:TRV) Recent Earnings Growth Beat The Trend?

For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at The Travelers Companies, Inc.'s (NYSE:TRV) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.

See our latest analysis for Travelers Companies

Were TRV's earnings stronger than its past performances and the industry?

TRV's trailing twelve-month earnings (from 30 June 2019) of US$2.7b has jumped 32% compared to the previous year.

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Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -11%, indicating the rate at which TRV is growing has accelerated. What's the driver of this growth? Let's take a look at whether it is solely a result of an industry uplift, or if Travelers Companies has experienced some company-specific growth.

NYSE:TRV Income Statement, September 24th 2019
NYSE:TRV Income Statement, September 24th 2019

In terms of returns from investment, Travelers Companies has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 2.8% exceeds the US Insurance industry of 2.5%, indicating Travelers Companies has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Travelers Companies’s debt level, has declined over the past 3 years from 11% to 8.4%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 25% to 26% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. You should continue to research Travelers Companies to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for TRV’s future growth? Take a look at our free research report of analyst consensus for TRV’s outlook.

  2. Financial Health: Are TRV’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.