Cincinnati Shares Hit 52-Week High - Analyst Blog
04 Avril 2013 - 4:40PM
Zacks
On Apr 3, 2013, shares of
Cincinnati Financial Corp. (CINF) hit a 52-week
high of $47.69. The company reported a positive earnings surprise
of 122% in the fourth quarter. Cincinnati Financial witnessed
positive earnings surprises in all the 4 quarters of 2012, with an
average beat of 64.01%.
Cincinnati’s Excess and Surplus line is performing well. Despite a
soft market environment, the segment has been able to achieve rate
increases consistently. We expect the trend to continue, given the
improving excess and surplus lines market.
Moreover, the company engages in appointing agencies to augment its
performance in the long-term. During 2013 it plans to appoint
around 65 agencies. These new agencies are expected to plough in $5
billion of direct written premium by 2015.
Its long-term strategy also includes geographical diversification
of operations which makes Cincinnati a national insurer, a step up
from being a regional insurer.
Cincinnati has a strong capital position which allows it to indulge
in share repurchases and dividend payouts to create shareholder
value. The company also focuses on maintaining lower debt levels.
Moreover, its consistent cash flow and prudent cash balances
continue to create strong liquidity.
Significant share repurchases and long-term growth strategies are
expected to bolster earnings of Cincinnati going forward.
Cincinnati is scheduled to report its first quarter, 2013 results
on Apr 25, 2013. The Zacks Consensus Estimate for the first quarter
of 2013 is pegged at 52 cents representing a year over year
improvement of 7.64%.
Valuation looks attractive for Cincinnati. The shares are trading
at a discount to the peer group average, both on a price-to-book
basis and forward price-to-earnings basis, with return on equity
remaining 1.4% above the peer group average of 7.3%. The 1-year
return from the stock is 37.43%, much above NASDAQ’s return of
4.11%.
Cincinnati currently carries a Zacks Rank #2 (Buy). Other stocks in
this industry such as AXIS Capital Holdings
Limited (AXS), EMC Insurance Group Inc.
(EMCI) and Arch Capital Group Ltd. (ACGL) carry a
favorable Zacks Rank #1 (Strong Buy) and appear impressive.
ARCH CAP GP LTD (ACGL): Free Stock Analysis Report
AXIS CAP HLDGS (AXS): Free Stock Analysis Report
CINCINNATI FINL (CINF): Free Stock Analysis Report
EMC INSURANCE (EMCI): Free Stock Analysis Report
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