Cincinnati Financial (NASDAQ: FNHC) and Federated National Holding Co Common Stock (NASDAQ:FNHC) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, dividends and analyst recommendations.

Analyst Recommendations

This is a summary of current recommendations for Cincinnati Financial and Federated National Holding Co Common Stock, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cincinnati Financial 1 3 0 0 1.75
Federated National Holding Co Common Stock 0 0 1 1 3.50

Cincinnati Financial presently has a consensus price target of $70.00, indicating a potential downside of 9.28%. Federated National Holding Co Common Stock has a consensus price target of $27.00, indicating a potential upside of 6.64%. Given Federated National Holding Co Common Stock’s stronger consensus rating and higher possible upside, analysts plainly believe Federated National Holding Co Common Stock is more favorable than Cincinnati Financial.

Institutional and Insider Ownership

62.3% of Cincinnati Financial shares are owned by institutional investors. Comparatively, 60.0% of Federated National Holding Co Common Stock shares are owned by institutional investors. 9.3% of Cincinnati Financial shares are owned by insiders. Comparatively, 10.8% of Federated National Holding Co Common Stock shares are owned by 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 Federated National Holding Co Common Stock’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cincinnati Financial $5.73 billion 2.19 $1.05 billion $2.74 28.16
Federated National Holding Co Common Stock $391.66 million 0.82 $7.98 million $0.60 42.20

Cincinnati Financial has higher revenue and earnings than Federated National Holding Co Common Stock. Cincinnati Financial is trading at a lower price-to-earnings ratio than Federated National Holding Co Common Stock, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Cincinnati Financial and Federated National Holding Co Common Stock’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cincinnati Financial 16.59% 6.36% 2.32%
Federated National Holding Co Common Stock 4.42% 8.13% 1.84%

Dividends

Cincinnati Financial pays an annual dividend of $2.12 per share and has a dividend yield of 2.7%. Federated National Holding Co Common Stock pays an annual dividend of $0.32 per share and has a dividend yield of 1.3%. Cincinnati Financial pays out 77.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Federated National Holding Co Common Stock pays out 53.3% of its earnings in the form of a dividend. Cincinnati Financial has raised its dividend for 57 consecutive years and Federated National Holding Co Common Stock has raised its dividend for 5 consecutive years. Cincinnati Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Cincinnati Financial has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Federated National Holding Co Common Stock has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500.

Summary

Cincinnati Financial beats Federated National Holding Co Common Stock on 10 of the 18 factors compared between the two stocks.

Cincinnati Financial Company Profile

Cincinnati Financial Corporation 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 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 offered to employees through their employer; and whole life insurance products, as well as markets disability income insurance, 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. Cincinnati Financial Corporation was founded in 1950 and is headquartered in Fairfield, Ohio.

Federated National Holding Co Common Stock Company Profile

FedNat Holding Company, through its subsidiaries, engages in insurance underwriting, distribution, and claims processing business in the United States. The company underwrites homeowner's multi-peril, personal automobile, commercial general liability, federal flood, and other lines of insurance. It markets and distributes its own and third-party insurers' products, and other services through a network of independent and general agents. The company was formerly known as Federated National Holding Company and changed its name to FedNat Holding Company in May 2018. FedNat Holding Company was founded in 1991 and is based in Sunrise, Florida.

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