Attractive P/E Ratio
Reasonable Price to Sales Ratio
Strong Return on Equity
Solid Net Profit Margin
Exceptional Liquidity Ratios
Good Interest Coverage
📈 Strong Financial Performance
💪 Solid Underwriting Profitability
📊 Sustainable Growth Strategy
🚀 Investment in Technology and Innovation
🔍 Focus on Market Adaptability
High Price to Book Ratio
High EV/EBITDA Ratio
Low Operating Profit Margin
Gross Profit Margin Exceeds 100%
High Debt to Equity Ratio
Cash Ratio Below 1
⚠️ Challenges in the Catastrophe Environment
📉 Potential for Market Pressure
Travelers demonstrates strong business quality through exceptional financial performance and a solid underwriting model. However, challenges from catastrophic events and market pressures introduce uncertainties. The company's future prospects are bolstered by significant investments in technology and adaptability to market dynamics, though potential pricing pressures could impact growth.
Analysis Date: January 22, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$846.36
Current Market Price: $241.54
IV/P Ratio: 3.50x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
71.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for TRV
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (11.02)
P/B ratio ≤ 1.5 (243.12)
Current ratio ≥ 2.0 (29.02x)
Long-term debt < Net current assets (0.07x)
Margin of safety (71.0%)
TRV does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
The return on equity (ROE) of 25.70% indicates that the company is effective in generating profits from its equity, which is a strong sign of profitability.
With a net profit margin of 10.77%, the company demonstrates effective cost management and profitability relative to its revenues.
The operating profit margin of 4.79% is relatively low, indicating that the company may face challenges in controlling its operating expenses.
A gross profit margin of over 100% indicates potential anomalies in reporting or revenue recognition, which may raise concerns about the quality of earnings.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
25.70%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
1.56%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
100.23%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
10.77%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
The current and quick ratios both at approximately 29.02 indicate extremely strong liquidity, suggesting the company can easily cover its short-term obligations.
The interest coverage ratio of 5.67 indicates that the company has sufficient earnings to cover its interest expenses, highlighting financial stability.
The debt to equity ratio of 35.45 indicates a high level of leverage, which could pose risks if the company faces financial difficulties.
With a cash ratio of 0.18, the company may not have enough cash on hand to cover short-term liabilities, indicating a potential liquidity concern despite high current and quick ratios.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
35.45x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
29.02x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Travelers reported a core income increase of 64% to over $5 billion for the full year, with a core return on equity of 17.2%. This was driven by strong fundamentals, growth in earned premiums, and excellent underwriting profitability.
The company achieved an exceptional combined ratio of 83.2%, showing an improvement from the previous year. All three segments reported strong underwriting margins, indicating effective risk management.
Travelers has consistently grown net written premiums, with an 8% increase reported for the year, supported by strong pricing and excellent retention. This organic growth strategy reflects a low-risk approach to expanding market share.
The company acknowledged the impact of recent catastrophic events, including wildfires in California, which could significantly affect future earnings. The uncertainty around such events adds a level of risk to their business model.
Travelers is investing heavily in technology, with over $1.5 billion spent on strategic initiatives. This includes advancements in analytics, automation, and customer experience, which are expected to enhance their competitive edge going forward.
The company is proactively managing its exposure to high-risk areas, such as wildfires, while also enhancing reinsurance protections. This adaptability positions Travelers to better navigate future market conditions.
The competitive landscape in insurance remains challenging, particularly with pricing pressures observed in certain lines such as workers' compensation. This could affect future premium growth and margins.