Here's Why Investors Should Hold Cincinnati Financial (CINF)
Cincinnati Financial Corporation CINF has been gaining momentum on the back of higher level of insured exposures, flexible liquidity and low leverage and effective capital deployment.
Growth Projections
The Zacks Consensus Estimate for Cincinnati Financial’s 2023 earnings is $4.64, indicating a 9.4% increase from the year-ago reported figure on 4.4% higher revenues of $8.38 billion.
The consensus estimate for 2024 earnings is $5.82, indicating a 25.3% increase from the year-ago reported figure on 7.4% higher revenues of $9 billion.
Northbound Estimate Revision
The Zacks Consensus Estimate for both 2023 and 2024 earnings has moved 0.2% and 0.8% north, respectively, in the past 30 days. This should instill investors' confidence in the stock.
Zacks Rank & Price Performance
Cincinnati Financial currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 0.5% compared with the industry’s increase of 3.9%.
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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 extended use of pricing precision tools.
The Commercial Lines business is expected to gain from solid premiums earned, reflecting renewal written premium growth that continued to include higher average pricing and improved level of insured exposures.
Investment income should continue to rise because of the surge in equity portfolio dividends and interest income. Moreover, cash flow from operating activities consistently helps the company boost investment income.
The property and casualty insurer is focused on earning new business through appointment of new agencies from a combination of quality service and expansion of insurance products for clients of those agencies. Agencies, appointed since the beginning of 2022, contributed 5% of total new business written premiums. So far in 2023, the insurer has appointed 66 agencies, including 23 that market only personal lines products.
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.
Cincinnati Financial has returned capital to shareholders through regular cash dividends as well as special dividends. In January 2023, the board increased quarterly cash dividend by 9% and this action sets the stage for a 63rd consecutive year of rising dividend payments.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Kinsale Capital Group, Inc. KNSL, RLI Corp. RLI and Root, Inc. ROOT. While Kinsale Capital and RLI Corp. sport a Zacks Rank #1 (Strong Buy), Root carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 14.77%. Year to date, KNSL has gained 34.9%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $10.37 and $12.41, indicating a year-over-year increase of 32.9% and 19.6%, respectively.
RLI Corp. beat estimates in each of the last four quarters, the average being 43.50%. Year to date, RLI has lost 1.1%.
The Zacks Consensus Estimate for RLI’s 2023 and 2024 earnings has moved 10.1% and 3.7% north, respectively, in the past 30 days.
Root beat estimates in each of the last four quarters, the average being 18.24%. Year to date, the insurer has gained 33.7%.
The Zacks Consensus Estimate for ROOT’s 2023 and 2024 earnings per share indicates a year-over-year increase of 43.8% and 42.5%, respectively.
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RLI Corp. (RLI) : Free Stock Analysis Report
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
Root, Inc. (ROOT) : Free Stock Analysis Report
