Here's Why Cincinnati Financial (CINF) Is a Solid Pick Now
Cincinnati Financial Corporation CINF remains well-poised for growth, driven by a higher level of insured exposures, rate increase, agent-focused business model, consistent cash flow and a solid capital position.
Growth Projections
The Zacks Consensus Estimate for Cincinnati Financial’s 2024 earnings is pegged at $6.16 per share, indicating a 2.1% increase from the year-ago reported figure on 9.2% higher revenues of $9.71 billion.
The consensus estimate for 2025 earnings is pegged at $6.77 per share, indicating a 9.8% increase from the year-ago reported figure on 7.5% higher revenues of $10.44 billion.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 earnings has moved 1.6% and 3.6% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Earnings Surprise History
Cincinnati Financial has a solid earnings surprise history. It beat estimates in each of the last four quarters, the average being 43.05%.
Zacks Rank & Price Performance
Cincinnati Financial currently carries a Zacks Rank #2 (Buy). Year to date, the stock has gained 8.1% compared with the industry’s growth of 13%.
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Business Tailwinds
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. 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 improved 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 2.6% is better than the industry average of 0.2%, 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.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Arch Capital Group Ltd. ACGL, Axis Capital Holdings Limited AXS and Mercury General Corporation MCY, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital has a solid record of beating earnings estimates in each of the trailing four quarters, the average being 27.32%. Year to date, ACGL has jumped 15.9%.
The Zacks Consensus Estimate for the company’s 2023 and 2024 revenues is pegged at $15.52 billion and $16.93 billion, indicating a year-over-year increase of 15% and 9%, respectively.
Axis Capital has a solid record of beating earnings estimates in each of the trailing four quarters, the average being 102.57%. Year to date, the insurer has gained 11.9%.
The Zacks Consensus Estimate for the company’s 2023 and 2024 earnings per share is pegged at $10.10 and $11.07, indicating a year-over-year increase of 2.5% and 9.6%, respectively.
Mercury General beat estimates in three of the last four quarters and matched in one, the average being 3,417.48%. Year to date, the insurer has rallied 35.8%.
The Zacks Consensus Estimate for the company’s 2023 and 2024 earnings per share is pegged at $2.90 and $3.90, indicating a year-over-year rise of 866.67% and 34.48%, respectively.
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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
Mercury General Corporation (MCY) : Free Stock Analysis Report
