On Sep 25, Zacks Investment Research upgraded Cincinnati Financial Corp. (CINF) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Cincinnati Financial has witnessed rising earnings estimates on the back of strong second-quarter 2013 results. Moreover, this property and casualty insurer delivered positive earnings surprises in the last 4 quarters with an average beat of 72%.
Cincinnati Financial reported second-quarter results on Jul 26. Non-GAAP earnings per share came in at 61 cents, surpassing the Zacks Consensus Estimate of 32 cents by 90.6% and year-ago earnings by more than three fold.
Earnings were primarily aided by increased underwriting profits from each of the three property casualty segments.
Revenue for Cincinnati Financial improved 8% year over year driven by higher premiums earned (up 9% year over year). In addition, total benefits and expenses for Cincinnati Financial in the quarter decreased 3.5%.
At quarter-end, debt to capital ratio improved 50 basis points to 13.6% from 14.1% at year-end 2012. As of Jun 30, 2013, book value per share of Cincinnati Financial was $34.83, up 4% from Dec 31, 2012.
In August, the board also approved a 3.1% hike in its quarterly dividend to 42 cents per share. Its dividend yield of 3.6% is ahead of the industry yield of 2.5%
The Zacks Consensus Estimate for 2013 increased 15.3% to $2.56 per share. All the estimates were revised higher over the last 60 days. For fiscal 2014 as well, the Zacks Consensus Estimate moved to $2.43 by 4.3%, owing to the upward revision of all the estimates.
Other Stocks to Consider
Other better-placed property and casualty insurers Alleghany Corp. (Y), Berkshire Hathaway Inc. (BRK.A) (BRK.B) and CNA Financial Corp. (CNA), that carry a Zacks Rank #1 (Strong Buy), are also worth considering.
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