Back to top

Image: Bigstock

Cincinnati Financial (CINF) Up 29% in a Year: More Upside Left?

Read MoreHide Full Article

Shares of Cincinnati Financial Corporation (CINF - Free Report) have rallied 29.1% in a year compared with the industry and the Finance sector’s rally of 21.6% and 22.5%, respectively. The Zacks S&P 500 composite has increased 26.2% in the said time frame. With a market capitalization of $19.2 billion, the average volume of shares traded in the last three months was 0.5 million.
 

Zacks Investment ResearchImage Source: Zacks Investment Research

Agent-centered business model, improving premium, industry-leading margins, and solid capital position continue to drive Cincinnati Financial. This Zacks Rank #3 (Hold) property and casualty insurer has a solid track of beating earnings estimates in the trailing four quarters.

Return on equity in the trailing 12 months was 8.6%, better than the industry average of 5.6%. This highlights the company’s efficiency in utilizing shareholders’ fund.

Cincinnati Financial has a favorable VGM Score of B.

Can it Retain the Momentum?

Placed among the top 25 U.S. P&C insurers, Cincinnati Financial’s premium growth outperforms the industry average. The insurer continues to appoint new agency, expand marketing and service capabilities with a focus on high net worth clients, expand reinsurance assumed through Cincinnati Re to deploy capital and diversify risk to fuel premium improvement.

CINF has already implemented predictive analytics to improve its pricing precision while leveraging local relationships with its agents.

Prudent underwriting helps Cincinnati Financial deliver improved profitability. CINF targets a 95% to 100% combined ratio over the long term.

The company targets a value creation ratio of 10% to 13% over the next five years. Sustained solid operational performance should help it achieve the target.

Cincinnati Financial has a solid balance sheet with high liquidity and low leverage.  The insurer boasts 32 years of favorable reserve development.

Cincinnati Financial has a favorable Growth Score of B

Dividend History

Riding on a solid capital position, Cincinnati Financial has been hiking dividends for the last 61 years. Only seven U.S. public companies match this record. Its dividend yield of 2.1% appears attractive compared with the industry average of 0.3%, making it an attractive pick for yield-seeking investors.

Stocks to Consider

Some better-ranked stocks from the same space include Hallmark Financial Services (HALL - Free Report) , Fidelity National Financial (FNF - Free Report) and ProAssurance (PRA - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Hallmark Financial’s 2022 earnings stands at 25 cents on revenues of $363.2 million. Hallmark Financial, sporting a Zacks Rank #1, delivered a four-quarter average earnings surprise of 53.62%.

The Zacks Consensus Estimate for 2022 Fidelity National’s earnings has moved up 4.6% in the past 60 days. Fidelity National delivered a four-quarter average earnings surprise of 38.18%.

The Zacks Consensus Estimate for ProAssurance’s 2022 earnings has moved up 5.3% higher in the past 60 days. ProAssurance delivered a four-quarter average earnings surprise of 233.34%.

Shares of HALL, FNF, and PRA have rallied 26.1%, 42.1% and 52.9%, respectively, in a year.