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Is It Time to Add Cincinnati Financial (CINF) to Portfolio?
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Cincinnati Financial Corporation (CINF - Free Report) seems to be well poised for growth. The insurer, which ranks among the top 25 property and casualty (P&C) insurers in the U.S, has been witnessing a rise in estimates over the last 60 days. Estimates for 2017 inched up 0.7%, while those for 2018 rose 3.4%.
Cincinnati Financial has been delivering positive surprises for the last seven quarters. Also, our proven model shows the company is poised for another earnings beat in first-quarter 2017. This is because the stock has a positive Earnings ESP and a favorable Zacks Rank #2 (Buy).
Valuation at present is attractive. In terms of price to earnings ratio, the shares are currently trading at 24.7x, a 6.4% discount to the industry. However, the price to book ratio of 1.7x is higher than industry average of 1.4x. Return on equity of 7.3% is also higher than the industry average of 6.7%.
Appointing new agencies was one of the several important strategic initiatives taken up by the company in 2014. The insurer has been steadily appointing agencies ever since, which is also a primary strategic advantage given its agent-centered business model. The insurer is also confident that its agent-focused business model will drive long-term premium growth, maintaining the trend displayed for more than 60 years. The company also plans to appoint agencies to focus on high net worth personal lines clients, boosting premiums for the company’s Executive Capstone suite of insurance products and services.
Cincinnati Financial’s Commercial Lines Property Casualty Insurance segment is expected to continue delivering strong results. Growth initiatives undertaken as well as a gradual increase in insurance rates should boost results going forward.
Cincinnati Financial’s balance sheet strength has enabled it to increase its dividend for 57 years, a record matched by only eight other publicly-traded companies in the U.S. Also, its dividend yield of 2.78% is better than the industry average of 2.58%. This makes the stock an attractive pick for the investors. The company also actively repurchases shares.
Shares of Cincinnati Financial unperformed the Zacks categorized Property, Casualty and Title Insurance industry in the last one year. While Cincinnati Financial’s shares gained 10.75%, the industry gained 17.47%. Nonetheless, we expect low leverage, ample capital, consistent cash flow generation, favorable reserve release, share repurchases and consistent dividend hikes to drive shares in the future.
American Financial Group engages primarily in P&C insurance with focus on specialized commercial products for businesses. Shares of the company gained 34.09% in a year’s time.
Selective Insurance provides insurance products and services in the U.S. Its shares rallied 27.06% in a year’s time.
Progressive offers personal and commercial P&C insurance, and other specialty P&C insurance and related services, primarily in the U.S. Shares of the company gained 11.66% in a year’s time.
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Is It Time to Add Cincinnati Financial (CINF) to Portfolio?
Cincinnati Financial Corporation (CINF - Free Report) seems to be well poised for growth. The insurer, which ranks among the top 25 property and casualty (P&C) insurers in the U.S, has been witnessing a rise in estimates over the last 60 days. Estimates for 2017 inched up 0.7%, while those for 2018 rose 3.4%.
Cincinnati Financial has been delivering positive surprises for the last seven quarters. Also, our proven model shows the company is poised for another earnings beat in first-quarter 2017. This is because the stock has a positive Earnings ESP and a favorable Zacks Rank #2 (Buy).
Valuation at present is attractive. In terms of price to earnings ratio, the shares are currently trading at 24.7x, a 6.4% discount to the industry. However, the price to book ratio of 1.7x is higher than industry average of 1.4x. Return on equity of 7.3% is also higher than the industry average of 6.7%.
Appointing new agencies was one of the several important strategic initiatives taken up by the company in 2014. The insurer has been steadily appointing agencies ever since, which is also a primary strategic advantage given its agent-centered business model. The insurer is also confident that its agent-focused business model will drive long-term premium growth, maintaining the trend displayed for more than 60 years. The company also plans to appoint agencies to focus on high net worth personal lines clients, boosting premiums for the company’s Executive Capstone suite of insurance products and services.
Cincinnati Financial’s Commercial Lines Property Casualty Insurance segment is expected to continue delivering strong results. Growth initiatives undertaken as well as a gradual increase in insurance rates should boost results going forward.
Cincinnati Financial’s balance sheet strength has enabled it to increase its dividend for 57 years, a record matched by only eight other publicly-traded companies in the U.S. Also, its dividend yield of 2.78% is better than the industry average of 2.58%. This makes the stock an attractive pick for the investors. The company also actively repurchases shares.
Shares of Cincinnati Financial unperformed the Zacks categorized Property, Casualty and Title Insurance industry in the last one year. While Cincinnati Financial’s shares gained 10.75%, the industry gained 17.47%. Nonetheless, we expect low leverage, ample capital, consistent cash flow generation, favorable reserve release, share repurchases and consistent dividend hikes to drive shares in the future.
Other Stocks to Consider
Other well-ranked stocks from the same industry are American Financial Group, Inc. (AFG - Free Report) , Selective Insurance Group, Inc. (SIGI - Free Report) and The Progressive Corporation (PGR - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
American Financial Group engages primarily in P&C insurance with focus on specialized commercial products for businesses. Shares of the company gained 34.09% in a year’s time.
Selective Insurance provides insurance products and services in the U.S. Its shares rallied 27.06% in a year’s time.
Progressive offers personal and commercial P&C insurance, and other specialty P&C insurance and related services, primarily in the U.S. Shares of the company gained 11.66% in a year’s time.
Zacks’ Best Private Investment IdeasIn addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time? Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>