Yahoo Finance Why You Should Stay Invested in Cincinnati Financial (CINF)
Cincinnati Financial Corporation’s CINF higher level of insured exposure, rate increase, agent-focused business model, consistent cash flow and a solid capital position make it worth retaining in one’s portfolio.
Shares of this Zacks Rank #3 (Hold) insurer have gained 12.1% year to date, compared with the industry’s increase of 15.9%.
It has a solid history of delivering positive surprises in the last five quarters.
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Return on Equity
CINF has a return on equity (“ROE”) of 9.3%, better than the industry average of 7.8%. ROE measures how efficiently a company utilizes shareholders’ funds to generate profit.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2024 and 2025 earnings per share has moved 1.6% and 1% north, respectively, in the past 30 days, reflecting analyst optimism.
Optimistic Growth Projection
The Zacks Consensus Estimate for 2024 earnings stands at $6.37 per share, suggesting an increase of 5.6% on 10.6% higher revenues of $9.8 billion. The consensus estimate for 2025 earnings per share stands at $6.98, suggesting an increase of 9.6% on 8.5% higher revenues of $10.7 billion.
The long-term earnings growth is expected to be 7.3%. We expect the 2026 bottom line to witness a three-year CAGR of 6.5%.
Growth Drivers
Premiums of Cincinnati Financial should continue to benefit from prudent pricing, an agent-centric model, a higher level of insured exposures and disciplined expansion of Cincinnati Re. We expect 2026 net earned premiums to witness a three-year CAGR of 8.5%. 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 higher 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.
Net investment income should continue to benefit from increasing interest income from fixed-maturity securities and a decrease in equity portfolio dividends. An improved rate environment should add to the upside.
By nature of its operations, CINF is exposed to catastrophe losses, inducing volatility in its underwriting profitability. 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.
Notably, its free cash flow conversion has remained more than 150% over the last many quarters, reflecting its solid earnings.
Impressive Dividend History
The company boasts a track record of 64 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 2.8% is better than the industry average of 0.3%, making the stock an attractive pick for yield-seeking investors.
Stocks to Consider
Some top-ranked stocks from the insurance industry are HCI Group, Inc. HCI, Palomar Holdings PLMR and ProAssurance PRA, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group earnings surpassed estimates in each of the last four quarters, the average beat being 139.15%. In the past year, HCI has rallied 76.6%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies 57.6% and 4.3% year-over-year growth, respectively.
Palomar’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 15.10%. In the past year, PLMR’s stock has surged 53.4%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings indicates 25.8% and 16.1% year-over-year growth, respectively.
ProAssurance earnings surpassed estimates in two of the last four quarters and missed in the other two. In the past year, PRA’s stock has risen 10.9%.
The Zacks Consensus Estimate for PRA’s 2024 and 2025 earnings suggests 371.4% and 71.6% year-over-year growth, respectively.
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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
ProAssurance Corporation (PRA) : Free Stock Analysis Report
HCI Group, Inc. (HCI) : Free Stock Analysis Report
Palomar Holdings, Inc. (PLMR) : Free Stock Analysis Report
