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Valued at a market cap of $21.9 billion, Cincinnati Financial Corporation (CINF) provides property and casualty insurance and also has an investment portfolio. The Fairfield, Ohio-based company markets business, home, and auto insurance products through a select group of independent insurance agencies.
Shares of this insurance company have outpaced the broader market over the past 52 weeks. Cincinnati Financial has rallied 24.9% over this time frame, while the broader S&P 500 Index ($SPX) has gained 17.5%. However, on a YTD basis, the stock is down 2.5%, lagging behind SPX’s 1.3% rise.
Narrowing the focus, CINF has underperformed the Financial Select Sector SPDR Fund’s (XLF) 26.8% return over the past 52 weeks and 5.2% gain on a YTD basis.
On Feb. 10, CINF released its Q4 earnings results. Shares of the company rose 2.8% the following day as it delivered better-than-expected performance. CINF posted adjusted earnings of $3.14 per share, which topped the forecasted figure by a whopping 65.2% and advanced 37.7% from the year-ago quarter. Operating revenues increased 14.7% year-over-year to $2.6 billion and marginally outpaced the Street’s expectations. The company benefited from strong premium growth of 15%, higher net investment income, and a 280-bps improvement in its combined ratio, a key measure of underwriting profitability.
For the current fiscal year, ending in December, analysts expect Cincinnati Financial’s EPS to decline 29.3% year over year to $5.36. The company’s earnings surprise history is mixed. It topped the Wall Street estimates in three of the last four quarters while missing on another occasion.
Among the 10 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on three “Strong Buy,” two “Moderate Buy,” and five “Hold” ratings.
On Feb. 12, BMO Capital analyst Michael Zaremski maintained an “Outperform” rating on CINF and raised its price target to $153, which indicates a 9.1% potential upside from the current levels.
The mean price target of $153.14 represents a 9.2% upside from Cincinnati Financial’s current price levels, while the Street-high price target of $182 suggests an upside potential of 29.8%.
