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Reasons Why Cincinnati Financial (CINF) is a Solid Pick Now
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Cincinnati Financial Corporation (CINF - Free Report) has been in investors’ good books on the back of renewal written premium, appointment of new agencies and, higher average pricing.
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $4.82 and $4.88, indicating year-over-year increase of 46.9% and 1.2%, respectively.
Estimate Revision
Estimates for 2021 and 2022 have moved up nearly 6.4% and 2.7%, respectively, in the past 30 days that reflects investors’ optimism.
Earnings Surprise History
Cincinnati Financial has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, with the average being 36.01%.
Zacks Rank & Price Performance
Cincinnati Financial currently carries a Zacks Rank #1 (Strong Buy). In the past year, the stock has rallied 56.7% compared with the industry’s increase of 22.8%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 7.7%, better than the industry average of 5.7%. This reflects the company’s efficiency in utilizing shareholders’ funds.
Business Tailwinds
Though the pandemic and soft economy lowered premium volume in the first quarter of 2021, continued economic strength contributed to premium growth in the first six months of 2021. Renewal written premium growth that includes higher average pricing should boost the Commercial Lines segment.
The pandemic did not have any major effect on Personal Lines insurance segment premiums in the first half of 2021. Underwriting and pricing discipline in recent quarters as well as expanded use of enhanced pricing precision tools, including excess and surplus lines homeowner policies, is likely to drive the premium income of the Personal Lines segment.
As part of the strategic initiatives, Cincinnati Financial continues to appoint new agencies to develop additional points of distribution. In the first half of 2021, it appointed 121 new agencies that offer most of the property casualty insurance products.
Furthermore, higher overall net gains from the investment portfolio should drive the value creation ratio. Strong operating results and favorable securities markets produced an excellent VCR at 11.6% in the first half of 2021.
Cincinnati Financial boasts a solid balance sheet with high liquidity. The pandemic did not have a significant effect on its cash flows in the first half of 2021. Its strong cash flow continues to help boost investment income. Also, it has additional capacity to borrow $59 million on a revolving short-term line of credit.
Courtesy of solid financial strength, the insurer engages in capital deployment to enhance its shareholders value. In February 2021, Cincinnati Financial approved a 5% dividend hike that marked the 61st consecutive increase. Its current dividend yield of 2% is higher than the industry average of 0.4%.
Image: Bigstock
Reasons Why Cincinnati Financial (CINF) is a Solid Pick Now
Cincinnati Financial Corporation (CINF - Free Report) has been in investors’ good books on the back of renewal written premium, appointment of new agencies and, higher average pricing.
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $4.82 and $4.88, indicating year-over-year increase of 46.9% and 1.2%, respectively.
Estimate Revision
Estimates for 2021 and 2022 have moved up nearly 6.4% and 2.7%, respectively, in the past 30 days that reflects investors’ optimism.
Earnings Surprise History
Cincinnati Financial has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, with the average being 36.01%.
Zacks Rank & Price Performance
Cincinnati Financial currently carries a Zacks Rank #1 (Strong Buy). In the past year, the stock has rallied 56.7% compared with the industry’s increase of 22.8%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 7.7%, better than the industry average of 5.7%. This reflects the company’s efficiency in utilizing shareholders’ funds.
Business Tailwinds
Though the pandemic and soft economy lowered premium volume in the first quarter of 2021, continued economic strength contributed to premium growth in the first six months of 2021. Renewal written premium growth that includes higher average pricing should boost the Commercial Lines segment.
The pandemic did not have any major effect on Personal Lines insurance segment premiums in the first half of 2021. Underwriting and pricing discipline in recent quarters as well as expanded use of enhanced pricing precision tools, including excess and surplus lines homeowner policies, is likely to drive the premium income of the Personal Lines segment.
As part of the strategic initiatives, Cincinnati Financial continues to appoint new agencies to develop additional points of distribution. In the first half of 2021, it appointed 121 new agencies that offer most of the property casualty insurance products.
Furthermore, higher overall net gains from the investment portfolio should drive the value creation ratio. Strong operating results and favorable securities markets produced an excellent VCR at 11.6% in the first half of 2021.
Cincinnati Financial boasts a solid balance sheet with high liquidity. The pandemic did not have a significant effect on its cash flows in the first half of 2021. Its strong cash flow continues to help boost investment income. Also, it has additional capacity to borrow $59 million on a revolving short-term line of credit.
Courtesy of solid financial strength, the insurer engages in capital deployment to enhance its shareholders value. In February 2021, Cincinnati Financial approved a 5% dividend hike that marked the 61st consecutive increase. Its current dividend yield of 2% is higher than the industry average of 0.4%.
Other Stocks to Consider
Some other top-ranked property and casualty insurers include American Financial Group, Inc. (AFG - Free Report) , Everest Re Group, Ltd. and W.R. Berkley Corporation (WRB - Free Report) , each carrying a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of American Financial surpassed estimates in each of the last four quarters, the average being 52.82%.
Everest Re surpassed estimates in two of the last four quarters and missed in the other two, the average earnings surprise being 20.33%.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average being 16.51%.