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Here's Why Cincinnati Financial (CINF) Stock is a Solid Pick
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Cincinnati Financial Corporation (CINF - Free Report) is well poised for growth on the back of higher renewal written premiums, growth in equity portfolio dividends, a strong capital position and effective capital deployment.
Estimate Revision
Estimates for 2022 and 2023 have moved up nearly 3.6% and 1.7%, respectively, in the past 60 days, reflecting investors’ optimism.
Earnings Surprise History
Cincinnati Financial has a solid track record of beating earnings estimates in six of the last seven quarters.
Zacks Rank & Price Performance
Cincinnati Financial currently carries a Zacks Rank #2 (Buy). Year to date, the stock has rallied 0.1% against the industry’s decrease of 8.7%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
Cincinnati Financial’s ROE for the trailing 12 months is 8.8%, up 280 basis points year over year and better than the industry average of 5.7%. This reflects the company’s efficiency in utilizing shareholders’ funds.
Business Tailwinds
Cincinnati Financial is well poised to grow on the back of solid performance across the Commercial Lines and Personal Lines segments.
Performance of the Personal lines segment is likely to be driven by the planned expansion of high-net-worth business produced by the agencies, higher renewal written premiums and the expanded use of pricing precision tools.
The Commercial lines business is expected to grow, riding on price increases, growth initiatives and a higher level of insured exposure.
Investment income should continue to rise on growth in equity portfolio dividends and interest income from fixed-maturity securities.
CINF targets a 95% to 100% combined ratio over the long term.
Cincinnati Financial has a solid balance sheet with high liquidity and low leverage. Cash flow, a contributor to investment income and interest income, remains strong. CINF boasts 33 years of favorable reserve development.
Cincinnati Financial targets an average value creation ratio of 10% to 13% over the next five-year period.
In January 2022, Cincinnati Financial approved a 10% hike in its quarterly dividend to return more profits to stockholders. Its current dividend yield of 2.4% is higher than the industry’s average of 0.4%.
RLI’s earnings surpassed estimates in each of the last four quarters, with the average earnings surprise being 45.89%. In the past year, RLI has increased 5.6%.
The Zacks Consensus Estimate for RLI’s 2022 earnings has moved 0.7% north in the past 30 days.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, with the average earnings surprise being 27.08%. In the past year, W.R. Berkley's stock has increased 35%.
The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 6.5% and 5.1% north, respectively, in the past 60 days.
The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 60 days. In the past year, HCI Group’s stock has lost 33.4%.
The Zacks Consensus Estimate for HCI’s 2022 and 2023 earnings per share indicates a year-over-year increase of 280.9% and 75%, respectively.
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Here's Why Cincinnati Financial (CINF) Stock is a Solid Pick
Cincinnati Financial Corporation (CINF - Free Report) is well poised for growth on the back of higher renewal written premiums, growth in equity portfolio dividends, a strong capital position and effective capital deployment.
Estimate Revision
Estimates for 2022 and 2023 have moved up nearly 3.6% and 1.7%, respectively, in the past 60 days, reflecting investors’ optimism.
Earnings Surprise History
Cincinnati Financial has a solid track record of beating earnings estimates in six of the last seven quarters.
Zacks Rank & Price Performance
Cincinnati Financial currently carries a Zacks Rank #2 (Buy). Year to date, the stock has rallied 0.1% against the industry’s decrease of 8.7%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
Cincinnati Financial’s ROE for the trailing 12 months is 8.8%, up 280 basis points year over year and better than the industry average of 5.7%. This reflects the company’s efficiency in utilizing shareholders’ funds.
Business Tailwinds
Cincinnati Financial is well poised to grow on the back of solid performance across the Commercial Lines and Personal Lines segments.
Performance of the Personal lines segment is likely to be driven by the planned expansion of high-net-worth business produced by the agencies, higher renewal written premiums and the expanded use of pricing precision tools.
The Commercial lines business is expected to grow, riding on price increases, growth initiatives and a higher level of insured exposure.
Investment income should continue to rise on growth in equity portfolio dividends and interest income from fixed-maturity securities.
CINF targets a 95% to 100% combined ratio over the long term.
Cincinnati Financial has a solid balance sheet with high liquidity and low leverage. Cash flow, a contributor to investment income and interest income, remains strong. CINF boasts 33 years of favorable reserve development.
Cincinnati Financial targets an average value creation ratio of 10% to 13% over the next five-year period.
In January 2022, Cincinnati Financial approved a 10% hike in its quarterly dividend to return more profits to stockholders. Its current dividend yield of 2.4% is higher than the industry’s average of 0.4%.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are RLI Corp. (RLI - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and HCI Group, Inc. (HCI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
RLI’s earnings surpassed estimates in each of the last four quarters, with the average earnings surprise being 45.89%. In the past year, RLI has increased 5.6%.
The Zacks Consensus Estimate for RLI’s 2022 earnings has moved 0.7% north in the past 30 days.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, with the average earnings surprise being 27.08%. In the past year, W.R. Berkley's stock has increased 35%.
The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 6.5% and 5.1% north, respectively, in the past 60 days.
The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 60 days. In the past year, HCI Group’s stock has lost 33.4%.
The Zacks Consensus Estimate for HCI’s 2022 and 2023 earnings per share indicates a year-over-year increase of 280.9% and 75%, respectively.