Reasons Why Cincinnati Financial (CINF) is an Attractive Pick
Cincinnati Financial Corporation CINF remains well-poised for growth, driven by price increases, higher renewal written premiums, growth initiatives and improvement in equity portfolio dividends and interest income.
Growth Projections
The Zacks Consensus Estimate for Cincinnati Financial’s 2023 earnings is pegged at $5.45 per share, indicating a 28.5% increase from the year-ago reported figure on 10.5% higher revenues of $8.87 billion.
The consensus estimate for 2024 earnings is pegged at $6.01 per share, indicating a 10.2% increase from the year-ago reported figure on 5.6% higher revenues of $9.37 billion.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 earnings has moved 2.6% and 0.3% north, respectively, in the past seven days, reflecting analysts’ optimism.
Earnings Surprise History
Cincinnati Financial surpassed earnings in three of the last four quarters and missed in one, the average being 38.33%.
Zacks Rank
Cincinnati Financial currently sports a Zacks Rank #1 (Strong Buy).
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 the 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 8% of total new business written premiums in the reported quarter. In the first nine months of 2023, the company has made 236 new agency appointments, including 70 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.
CINF has returned capital to shareholders through regular cash dividends as well as special dividends. Through 2022, the insurer had increased the annual cash dividend rate for 62 consecutive years, a record which is believed to be matched by only seven other U.S. publicly traded companies. The dividend increases reflected strong operating performance and signaled management's and the board's positive outlook and confidence in outstanding capital, liquidity and financial flexibility.
Price Performance
Over the past year, the stock has lost 0.9% against the industry’s increase of 15.6%.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Arch Capital Group Ltd. ACGL, W.R. Berkley Corporation WRB and Mercury General Corporation MCY, each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital beat estimates in each of the last four quarters, the average being 35.16%. In the past year, the insurer has gained 36%.
The Zacks Consensus Estimate for ACGL’s 2023 and 2024 earnings per share is pegged at $7.67 and $7.71, indicating a year-over-year increase of 57.4% and 0.5%, respectively.
W.R. Berkley beat estimates in three of the last four quarters and missed in one, the average being 4.35%. In the past year, the insurer has lost 5.9%.
The Zacks Consensus Estimate for WRB’s 2023 and 2024 earnings per share is pegged at $4.74 and $5.70, indicating a year-over-year increase of 8.2% and 20.1%, respectively.
Mercury General beat estimates in two of the last four quarters and missed in the other two, the average being 2,833.05%. In the past year, the insurer has gained 8.3%.
The Zacks Consensus Estimate for MCY’s 2023 and 2024 earnings per share indicates a year-over-year increase of 65.2% and 343.7%, respectively.
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W.R. Berkley Corporation (WRB) : Free Stock Analysis Report
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
Mercury General Corporation (MCY) : Free Stock Analysis Report
