Cincinnati Financial (NASDAQ:CINF) and Donegal Group (NASDAQ:DGICB) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, institutional ownership, analyst recommendations, dividends, earnings, profitability and risk.

Volatility and Risk

Cincinnati Financial has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500. Comparatively, Donegal Group has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Cincinnati Financial and Donegal Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cincinnati Financial 0 2 2 0 2.50
Donegal Group 0 0 0 0 N/A

Cincinnati Financial currently has a consensus price target of $103.75, indicating a potential downside of 6.09%. Given Cincinnati Financial’s higher probable upside, analysts clearly believe Cincinnati Financial is more favorable than Donegal Group.

Dividends

Cincinnati Financial pays an annual dividend of $2.24 per share and has a dividend yield of 2.0%. Donegal Group pays an annual dividend of $0.51 per share and has a dividend yield of 3.6%. Cincinnati Financial pays out 66.9% of its earnings in the form of a dividend. Cincinnati Financial has raised its dividend for 58 consecutive years.

Insider & Institutional Ownership

63.8% of Cincinnati Financial shares are held by institutional investors. Comparatively, 1.6% of Donegal Group shares are held by institutional investors. 7.2% of Cincinnati Financial shares are held by company insiders. Comparatively, 7.2% of Donegal Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Cincinnati Financial and Donegal Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cincinnati Financial $5.41 billion 3.34 $287.00 million $3.35 32.98
Donegal Group $771.83 million 0.52 -$32.76 million N/A N/A

Cincinnati Financial has higher revenue and earnings than Donegal Group.

Profitability

This table compares Cincinnati Financial and Donegal Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cincinnati Financial 18.28% 7.17% 2.64%
Donegal Group 1.75% 0.39% 0.09%

Summary

Cincinnati Financial beats Donegal Group on 11 of the 15 factors compared between the two stocks.

Cincinnati Financial Company Profile

Cincinnati Financial Corporation, together with its subsidiary, provides property casualty insurance products in the United States. The company operates in five segments: Commercial Lines Insurance, Personal Lines Insurance, Excess and Surplus Lines Insurance, Life Insurance, and Investments. The Commercial Lines Insurance segment provides coverage for commercial casualty, commercial property, commercial auto, and workers' compensation. It also offers director and officer liability insurance, contract and commercial surety bonds, and fidelity bonds; coverage for property, liability, and business interruption; and machinery and equipment coverage. The Personal Lines Insurance segment provides personal auto insurance; homeowners insurance; and dwelling fire, inland marine, personal umbrella liability, and watercraft coverages to individuals. The Excess and Surplus Lines Insurance segment offers commercial casualty insurance that covers businesses for third-party liability from accidents occurring on their premises or arising out of their operations, such as injuries sustained from products; and commercial property insurance, which insures buildings, inventory, equipment, and business income from loss or damage due to various causes, such as fire, wind, hail, water, theft, and vandalism. The Life Insurance segment provides term life insurance products; universal life insurance products; worksite products, such as term life, whole life, and disability insurance; and whole life insurance products, as well as markets deferred annuities and immediate annuities. The Investments segment invests in fixed-maturity investments, including taxable and tax-exempt bonds, and redeemable preferred stocks; and equity investments comprising common and nonredeemable preferred stocks. The company also offers commercial leasing and financing services; and insurance brokerage services. Cincinnati Financial Corporation was founded in 1950 and is headquartered in Fairfield, Ohio.

Donegal Group Company Profile

Donegal Group Inc., an insurance holding company, provides personal and commercial lines of property and casualty insurance to businesses and individuals in the Mid-Atlantic, Midwestern, New England, and southern states. It operates through four segments: Investment Function, Personal Lines of Insurance, Commercial Lines of Insurance, and Investment in DFSC. The company offers private passenger automobile policies that provide protection against liability for bodily injury and property damage arising from automobile accidents, as well as protection against loss from damage to automobiles. It also offers homeowners policies, which provide coverage for damage to residences and their contents from a range of perils, including fire, lightning, windstorm, and theft; and liability of the insured arising from injury to other persons or their property. In addition, the company offers commercial automobile policies that provide protection against liability for bodily injury and property damage arising from automobile accidents and protection against loss from damage to automobiles owned by the insured; commercial multi-peril policies that provide protection to businesses against various perils, primarily combining liability and physical damage coverages; and workers' compensation policies, which provide benefits to employees for injuries sustained during employment. The company markets its insurance products through a network of approximately 2,400 independent insurance agencies. Donegal Group Inc. was founded in 1986 and is headquartered in Marietta, Pennsylvania. Donegal Group Inc. is a subsidiary of Donegal Mutual Insurance Company.

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