We are reiterating our Outperform recommendation on the shares
Cincinnati Financial Corp.
), following the first quarter earnings results. Cincinnati
Financial reported a solid first quarter which included a 18%
positive earnings surprise. Over the past four quarters this
Zacks Rank #2 (Buy) insurer delivered an average positive
surprise of 65%.
On Apr 24, Cincinnati Financial reported first-quarter
operating earnings of 78 cents per share, exceeding the Zacks
Consensus Estimate of 66 cents per share. Results were also 63%
higher than the year-ago quarter's earnings of $0.48. The
earnings beat came on the back of increased underwriting profits
from each of the three property casualty segments as well as
better performance by the life insurance segment.
Revenue for Cincinnati Financial during the first quarter was
$1.1 billion, up 12% year over year and ahead of the Zacks
Consensus Estimate of $1.06 billion.
Cincinnati Financial has been witnessing rising earnings
estimates. Over the last 60 days, 2 of the 4 estimates were
raised, pushing the Zacks Consensus Estimate by 6.2% to $2.23 for
2013. Estimates for 2014 rose 2.7% to $2.27 as the same number of
estimates were raised over the same time frame.
Cincinnati Financial is continuously witnessing improving
business conditions in Commercial and Excess and Surplus lines
A strong relationship with its agencies also bodes well for
However, Cincinnati Financial faces some headwinds in the form
of a low interest rate environment and exposure to catastrophes.
imparting volatility to the earnings.
Nevertheless, Cincinnati Financial's solid capital position
with low reliance on debt gives it an inherent
Other Stocks to Consider
Property and casualty insurers
HCI Group Inc.
Hanover Insurance Group Inc.
Montpelier Re Holdings Ltd.
) carry favorable Zacks Rank #1 (Strong Buy) and look
CINCINNATI FINL (CINF): Free Stock Analysis
HOMEOWNERS CHCE (HCI): Free Stock Analysis
MONTPELIER RE (MRH): Free Stock Analysis
HANOVER INSURAN (THG): Free Stock Analysis
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