Cincinnati Financial Corporation (NASDAQ: CINF) and Employers Holdings (NYSE:EIG) are both large-cap property & casualty insurance – nec companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Institutional & Insider Ownership

62.9% of Cincinnati Financial Corporation shares are held by institutional investors. Comparatively, 77.5% of Employers Holdings shares are held by institutional investors. 9.3% of Cincinnati Financial Corporation shares are held by insiders. Comparatively, 4.0% of Employers Holdings shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Cincinnati Financial Corporation and Employers Holdings’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Cincinnati Financial Corporation $5.45 billion 2.19 $591.00 million $3.03 23.95
Employers Holdings $779.80 million 2.02 $106.70 million $3.19 15.24

Cincinnati Financial Corporation has higher revenue and earnings than Employers Holdings. Employers Holdings is trading at a lower price-to-earnings ratio than Cincinnati Financial Corporation, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Cincinnati Financial Corporation has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500. Comparatively, Employers Holdings has a beta of 1.13, suggesting that its share price is 13% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Cincinnati Financial Corporation and Employers Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cincinnati Financial Corporation 0 4 1 0 2.20
Employers Holdings 1 1 1 0 2.00

Cincinnati Financial Corporation currently has a consensus target price of $77.33, indicating a potential upside of 6.56%. Employers Holdings has a consensus target price of $44.50, indicating a potential downside of 8.44%. Given Cincinnati Financial Corporation’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Cincinnati Financial Corporation is more favorable than Employers Holdings.

Dividends

Cincinnati Financial Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.8%. Employers Holdings pays an annual dividend of $0.60 per share and has a dividend yield of 1.2%. Cincinnati Financial Corporation pays out 66.0% of its earnings in the form of a dividend. Employers Holdings pays out 18.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cincinnati Financial Corporation has raised its dividend for 56 consecutive years. Cincinnati Financial Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Cincinnati Financial Corporation and Employers Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cincinnati Financial Corporation 8.93% 5.85% 2.03%
Employers Holdings 13.32% 10.39% 2.40%

Summary

Cincinnati Financial Corporation beats Employers Holdings on 9 of the 16 factors compared between the two stocks.

Cincinnati Financial Corporation Company Profile

Cincinnati Financial Corporation is an insurance holding company. It operates through five segments: Commercial lines insurance, Personal lines insurance, Excess and surplus lines insurance, and Life insurance and Investments. Its Commercial Lines Insurance Segment provides five commercial business lines: commercial casualty, commercial property, commercial auto, workers’ compensation and other commercial lines. Its personal lines property insurance segment writes personal lines coverage in accounts that include both auto and homeowner coverages, as well as coverages that are part of its other personal business line. The excess and surplus lines Insurance segment covers business risks with characteristics, such as the nature of the business or its claim history that are difficult to profitably insure in the standard commercial lines market. The life insurance business lines include term life insurance, universal life insurance, worksite products and whole life insurance.

Employers Holdings Company Profile

Employers Holdings, Inc. is a holding company. Through its insurance subsidiaries, the Company provides workers’ compensation insurance coverage to select, small businesses in low to medium hazard industries. It provides workers’ compensation insurance under a statutory system wherein employers are required to provide coverage for their employees’ medical, disability, vocational rehabilitation, and/or death benefit costs for work-related injuries or illnesses. As of December 31, 2016 the Company provided workers’ compensation insurance in 36 states and the District of Columbia, with a concentration in California. Its insurance subsidiaries include Employers Insurance Company of Nevada (EICN), Employers Compensation Insurance Company (ECIC), Employers Preferred Insurance Company (EPIC) and Employers Assurance Company (EAC). The Company’s insurance products are jointly offered and marketed with and through its partners and alliances.

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