Have you been paying attention to shares of Cincinnati Financial (CINF)? Shares have been on the move with the stock up 5.7% over the past month. The stock hit a new 52-week high of $103.41 in the previous session. Cincinnati Financial has gained 32.6% since the start of the year compared to the 10.1% move for the Zacks Finance sector and the 4.7% return for the Zacks Insurance - Property and Casualty industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 24, 2019, Cincinnati Financial reported EPS of $1.05 versus consensus estimate of $0.94.
Cincinnati Financial may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Cincinnati Financial has a Value Score of D. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 28.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 27.3X versus its peer group's average of 14.1X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Cincinnati Financial currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Cincinnati Financial passes the test. Thus, it seems as though Cincinnati Financial shares could have potential in the weeks and months to come.
How Does Cincinnati Financial Stack Up to the Competition?
Shares of Cincinnati Financial have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including The Progressive (PGR), American Financial Group (AFG), and RenaissanceRe Holdings (RNR), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 21% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Cincinnati Financial, even beyond its own solid fundamental situation.
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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
RenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis Report
American Financial Group, Inc. (AFG) : Free Stock Analysis Report
The Progressive Corporation (PGR) : Free Stock Analysis Report
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