Cincinnati Financial Corporation (NASDAQ: CINF) and Universal Insurance Holdings (NYSE:UVE) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, risk, earnings, institutional ownership, profitability, dividends and analyst recommendations.
Risk and Volatility
Cincinnati Financial Corporation has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500. Comparatively, Universal Insurance Holdings has a beta of 1.84, suggesting that its share price is 84% more volatile than the S&P 500.
Valuation & Earnings
This table compares Cincinnati Financial Corporation and Universal Insurance Holdings’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Cincinnati Financial Corporation||$5.62 billion||2.23||$889.00 million||$3.49||21.93|
|Universal Insurance Holdings||$711.40 million||0.98||$166.43 million||$2.81||7.14|
Cincinnati Financial Corporation has higher revenue and earnings than Universal Insurance Holdings. Universal Insurance 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.
Cincinnati Financial Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.6%. Universal Insurance Holdings pays an annual dividend of $0.56 per share and has a dividend yield of 2.8%. Cincinnati Financial Corporation pays out 57.3% of its earnings in the form of a dividend. Universal Insurance Holdings pays out 19.9% 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 increased its dividend for 56 consecutive years and Universal Insurance Holdings has increased its dividend for 3 consecutive years. Universal Insurance Holdings is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a breakdown of recent ratings and target prices for Cincinnati Financial Corporation and Universal Insurance Holdings, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Cincinnati Financial Corporation||0||4||1||0||2.20|
|Universal Insurance Holdings||0||0||1||0||3.00|
Cincinnati Financial Corporation currently has a consensus target price of $77.33, indicating a potential upside of 1.06%. Universal Insurance Holdings has a consensus target price of $29.00, indicating a potential upside of 44.64%. Given Universal Insurance Holdings’ stronger consensus rating and higher possible upside, analysts clearly believe Universal Insurance Holdings is more favorable than Cincinnati Financial Corporation.
This table compares Cincinnati Financial Corporation and Universal Insurance Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Cincinnati Financial Corporation||10.33%||6.57%||2.28%|
|Universal Insurance Holdings||14.21%||25.85%||8.56%|
Institutional & Insider Ownership
63.1% of Cincinnati Financial Corporation shares are held by institutional investors. Comparatively, 73.4% of Universal Insurance Holdings shares are held by institutional investors. 9.3% of Cincinnati Financial Corporation shares are held by insiders. Comparatively, 10.5% of Universal Insurance Holdings shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Universal Insurance Holdings beats Cincinnati Financial Corporation on 10 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.
Universal Insurance Holdings Company Profile
Universal Insurance Holdings, Inc. (UVE) is a private personal residential homeowners insurance company in Florida. The Company performs substantially all aspects of insurance underwriting, policy issuance, general administration, and claims processing and settlement internally. The Company’s subsidiaries include Universal Property & Casualty Insurance Company (UPCIC) and American Platinum Property and Casualty Insurance Company (APPCIC). UPCIC writes homeowners insurance policies in states, including Alabama, Delaware, Florida, Georgia, Hawaii, Indiana, Maryland, Massachusetts, Michigan, Minnesota, North Carolina, Pennsylvania, South Carolina and Virginia. APPCIC writes homeowners and commercial residential insurance policies in Florida. The Company has developed a suite of applications that provide underwriting, policy and claim administration services, including billing, policy maintenance, inspections, refunds, commissions and data analysis.
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