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With a market cap of $25 billion, Fairfield, Ohio-based Cincinnati Financial Corporation (CINF) is a leading provider of property and casualty insurance products in the United States. Through its subsidiaries, the company operates across five segments: Commercial Lines Insurance; Personal Lines Insurance; Excess and Surplus Lines Insurance; Life Insurance; and Investments.
The insurer's shares have outperformed the broader market over the past 52 weeks. CINF has increased 56.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 31.8%. In 2024, shares of CINF are up 54.8%, compared to SPX’s 25.8% gain on a YTD basis.
In addition, CINF has also outpaced the Financial Select Sector SPDR Fund’s (XLF) 45.4% return over the past 52 weeks and 36.3% return on a YTD basis.
Despite reporting weaker-than-expected Q3 adjusted EPS of $1.42 on Oct. 24, shares of Cincinnati Financial rose 2.2% the next day due to strong top-line growth, as total operating revenue increased 13% year-over-year, surpassing consensus estimates. Investors were encouraged by the robust 17% growth in net written premiums, driven by price increases, higher insured exposures, and a 15% rise in investment income fueled by higher bond interest. Additionally, the company's financial stability, demonstrated by a 14.6% increase in book value per share and a low debt-to-capital ratio, likely reassured shareholders.
For the current fiscal year, ending in December, analysts expect CINF’s EPS to grow 4.6% year-over-year to $6.31. The company’s earnings surprise history is mixed. It beat the consensus 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.” That’s based on four “Strong Buy” ratings, one “Moderate Buy,” and five “Holds.”
On Oct. 29, Piper Sandler analyst Paul Newsome raised the price target on Cincinnati Financial to $126 with a “Neutral” rating, citing worse-than-expected quarterly results due to higher catastrophe losses and slightly weaker underwriting performance.
As of writing, CINF is trading above the mean price target of $148.62. The Street-high price target of $171 implies a potential upside of only 6.8% from the current price levels.
