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Here's Why Cincinnati Financial (CINF) is an Investor Favorite
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Cincinnati Financial Corporation’s (CINF - Free Report) higher level of insured exposures, rate increase, agent-focused business model, consistent cash flow and a solid capital position make it worth adding to one’s portfolio. In the past six months, this Zacks Rank #2 (Buy) insurer has gained 7.7% compared with the industry’s growth of 7%.
The Zacks Consensus Estimate for 2024 earnings stands at $6.05, suggesting an increase of 8.5% on 7.8% higher revenues of $9.6 billion. The long-term earnings growth rate is currently pegged at 18.2%, better than the industry average of 12.3%. We expect 2025 bottom line to witness a three-year CAGR of 8.7%.
Growth Drivers
Prudent pricing, an agent-centric model, a higher level of insured exposures and a disciplined expansion of Cincinnati Re should continue to drive Cincinnati Financial’s premiums. We expect 2025 net earned premiums to witness a three-year CAGR of 7.5%. CINF boasts above-average industry premium growth.
The Excess and Surplus line has been performing well since its inception in 2008. New business written premiums, higher renewal written premiums and higher average renewal estimated pricing are likely to boost the performance of this segment. Technology and data are also being used to identify new exposures in emerging businesses.
Increasing interest income from fixed-maturity securities and a decrease in equity portfolio dividends should continue to drive net investment income. An improved rate environment should add to the upside.
CINF’s underwriting profitability is weighed down by its exposure to catastrophe losses. Nonetheless, banking on prudent underwriting, CINF’s solid track record of 34 years of favorable reserve development is appreciable. It also has a reinsurance program to limit insured loss.
The company boasts a track record of 63 straight years of dividend hikes, reflecting operational expertise and the board's positive outlook and confidence in outstanding capital, liquidity and financial flexibility. Its dividend yield of 2.8% is better than the industry average of 0.3%, making the stock an attractive pick for yield-seeking investors. Notably, its free cash flow conversion has remained more than 150% over the last many quarters, reflecting its solid earnings.
It has a Value Score of B. This style score helps find the most attractive value stocks. Back-tested results have shown that stocks with a Value Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 offer better returns.
CNA Financial delivered a trailing four-quarter average earnings surprise of 9.24%. The stock has lost 3.2% in a year.
The Zacks Consensus Estimate for CNA’s 2024 earnings indicates an increase of 8.8% from the 2023 estimated figure. The expected long-term earnings growth rate is 5%. The consensus estimate for 2024 earnings has moved up 1.5% in the past 30 days.
Chubb’s earnings surpassed estimates in three of the last four quarters while missing in one, the average being 6.51%. The stock has gained 0.3% in a year.
The Zacks Consensus Estimate for Chubb’s 2024 earnings implies a rise of 7.3% from the 2023 estimated figure. The expected long-term earnings growth rate is 10%. The consensus estimate for CB’s 2024 earnings has moved up 0.2% in the past seven days.
Berkshire delivered a trailing four-quarter average earnings surprise of 0.20%. In a year, the stock has gained 14.8%.
The Zacks Consensus Estimate for BRK.B’s 2024 earnings indicates an increase of 11.1% from the 2023 estimated figure. The expected long-term earnings growth rate is 7%. The consensus estimate for BRK.B’s 2024 earnings has moved up 0.9% in the past 30 days.
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Here's Why Cincinnati Financial (CINF) is an Investor Favorite
Cincinnati Financial Corporation’s (CINF - Free Report) higher level of insured exposures, rate increase, agent-focused business model, consistent cash flow and a solid capital position make it worth adding to one’s portfolio. In the past six months, this Zacks Rank #2 (Buy) insurer has gained 7.7% compared with the industry’s growth of 7%.
The Zacks Consensus Estimate for 2024 earnings stands at $6.05, suggesting an increase of 8.5% on 7.8% higher revenues of $9.6 billion. The long-term earnings growth rate is currently pegged at 18.2%, better than the industry average of 12.3%. We expect 2025 bottom line to witness a three-year CAGR of 8.7%.
Growth Drivers
Prudent pricing, an agent-centric model, a higher level of insured exposures and a disciplined expansion of Cincinnati Re should continue to drive Cincinnati Financial’s premiums. We expect 2025 net earned premiums to witness a three-year CAGR of 7.5%. CINF boasts above-average industry premium growth.
The Excess and Surplus line has been performing well since its inception in 2008. New business written premiums, higher renewal written premiums and higher average renewal estimated pricing are likely to boost the performance of this segment. Technology and data are also being used to identify new exposures in emerging businesses.
Increasing interest income from fixed-maturity securities and a decrease in equity portfolio dividends should continue to drive net investment income. An improved rate environment should add to the upside.
CINF’s underwriting profitability is weighed down by its exposure to catastrophe losses. Nonetheless, banking on prudent underwriting, CINF’s solid track record of 34 years of favorable reserve development is appreciable. It also has a reinsurance program to limit insured loss.
The company boasts a track record of 63 straight years of dividend hikes, reflecting operational expertise and the board's positive outlook and confidence in outstanding capital, liquidity and financial flexibility. Its dividend yield of 2.8% is better than the industry average of 0.3%, making the stock an attractive pick for yield-seeking investors. Notably, its free cash flow conversion has remained more than 150% over the last many quarters, reflecting its solid earnings.
It has a Value Score of B. This style score helps find the most attractive value stocks. Back-tested results have shown that stocks with a Value Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 offer better returns.
Other Stocks to Consider
Some other top-ranked stocks from the same space are CNA Financial Corporation (CNA - Free Report) , Chubb Limited (CB - Free Report) and Berkshire Hathaway (BRK.B - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
CNA Financial delivered a trailing four-quarter average earnings surprise of 9.24%. The stock has lost 3.2% in a year.
The Zacks Consensus Estimate for CNA’s 2024 earnings indicates an increase of 8.8% from the 2023 estimated figure. The expected long-term earnings growth rate is 5%. The consensus estimate for 2024 earnings has moved up 1.5% in the past 30 days.
Chubb’s earnings surpassed estimates in three of the last four quarters while missing in one, the average being 6.51%. The stock has gained 0.3% in a year.
The Zacks Consensus Estimate for Chubb’s 2024 earnings implies a rise of 7.3% from the 2023 estimated figure. The expected long-term earnings growth rate is 10%. The consensus estimate for CB’s 2024 earnings has moved up 0.2% in the past seven days.
Berkshire delivered a trailing four-quarter average earnings surprise of 0.20%. In a year, the stock has gained 14.8%.
The Zacks Consensus Estimate for BRK.B’s 2024 earnings indicates an increase of 11.1% from the 2023 estimated figure. The expected long-term earnings growth rate is 7%. The consensus estimate for BRK.B’s 2024 earnings has moved up 0.9% in the past 30 days.