Reasons Why Cincinnati Financial (CINF) Is an Attractive Pick
Cincinnati Financial Corporation CINF is well-poised for growth on the back of higher renewal written premiums, higher level of insured exposures, flexible liquidity and low leverage and effective capital deployment.
Growth Projections
The Zacks Consensus Estimate for 2023 and 2024 earnings per share is pegged at $5.13 and $5.89, indicating a year-over-year increase of 20.9% and 14.7%, respectively.
Zacks Rank & Price Performance
Cincinnati Financial currently carries a Zacks Rank #2 (Buy). In the year-to-date period, the stock has gained 22.8%, outperforming the industry’s increase of 1.9%.
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Style Score
Cincinnati Financial has a VGM Score of B. VGM Score helps to identify stocks with the most attractive value, the best growth and the most promising momentum.
Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities in the value investing space.
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 higher renewal written premiums that benefited from rate increases and a higher level of insured exposures.
The Commercial lines business is expected to grow, riding on price increases, growth initiatives and a higher level of insured exposures. In 2022, commercial lines average renewal pricing increased in the mid-single-digit percent range.
Investment income should continue to rise owing to an increase in equity portfolio dividends and an increase in interest income from fixed-maturity securities. Moreover, cash flow from operating activities consistently helps the company boost investment income. From 2016-2022, the P&C insurer saw its net investment income grow 3.96%.
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 34 years of favorable reserve development.
CINF also has an impressive Value Score of B, reflecting an attractive valuation of the stock.
Cincinnati Financial returned capital to shareholders through regular cash dividends as well as special dividends. In January 2023, the Board increased the quarterly cash dividend 9%, which sets the stage for a 63rd consecutive year of rising dividend payments. Its current dividend yield of 2.2% is higher than the industry’s average of 0.3%.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited AXS, Everest Re Group, Ltd. RE and CNA Financial Corporation CNA. While Axis Capital and Everest Re sport a Zacks Rank #1, CNA Financial carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 5.70%. The Zacks Consensus Estimate for both 2023 and 2024 has moved 0.1% north in the past seven days.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.53 and $8.42, indicating a year-over-year increase of 29.6% and 11.7%, respectively. In the past year, AXS has gained 9%.
The Zacks Consensus Estimate for Everest Re’s 2023 and 2024 earnings per share is pegged at $44.68 and $51.29, indicating a year-over-year increase of 64.9% and 14.7%, respectively. In the past year, RE has gained 25.3%.
Everest Re beat estimates in each of the last four quarters, the average being 18.41%.
The Zacks Consensus Estimate for CNA Financials’ 2023 and 2024 earnings per share is pegged at $4.25 and $4.41, indicating a year-over-year increase of 10.6% and 3.8%, respectively. In the past year, CNA has lost 9%.
The Zacks Consensus Estimate for CNA’s 2023 and 2024 earnings has moved 4.2% and 14.8% north in the past 30 days.
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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Everest Re Group, Ltd. (RE) : Free Stock Analysis Report
CNA Financial Corporation (CNA) : Free Stock Analysis Report
