United Fire Group (NASDAQ:UFCS) and Cincinnati Financial (NASDAQ:CINF) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.
Institutional & Insider Ownership
60.3% of United Fire Group shares are held by institutional investors. Comparatively, 62.2% of Cincinnati Financial shares are held by institutional investors. 6.2% of United Fire Group shares are held by insiders. Comparatively, 9.3% of Cincinnati Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
United Fire Group has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500. Comparatively, Cincinnati Financial has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.
United Fire Group pays an annual dividend of $1.24 per share and has a dividend yield of 2.4%. Cincinnati Financial pays an annual dividend of $2.12 per share and has a dividend yield of 2.8%. 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. United Fire Group has increased its dividend for 4 consecutive years and Cincinnati Financial has increased its dividend for 57 consecutive years. Cincinnati Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares United Fire Group and Cincinnati Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|United Fire Group||6.93%||3.04%||0.83%|
This is a summary of recent ratings and price targets for United Fire Group and Cincinnati Financial, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|United Fire Group||0||1||1||0||2.50|
United Fire Group presently has a consensus target price of $53.00, suggesting a potential upside of 4.29%. Cincinnati Financial has a consensus target price of $70.00, suggesting a potential downside of 8.62%. Given United Fire Group’s stronger consensus rating and higher possible upside, equities research analysts plainly believe United Fire Group is more favorable than Cincinnati Financial.
Valuation & Earnings
This table compares United Fire Group and Cincinnati Financial’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|United Fire Group||$1.05 billion||1.21||$51.02 million||N/A||N/A|
|Cincinnati Financial||$5.73 billion||2.17||$1.05 billion||$2.74||27.96|
Cincinnati Financial has higher revenue and earnings than United Fire Group.
Cincinnati Financial beats United Fire Group on 11 of the 16 factors compared between the two stocks.
United Fire Group Company Profile
United Fire Group, Inc., together with its subsidiaries, provides insurance protection for individuals and businesses in the United States. The company operates through two segments, Property and Casualty Insurance, and Life Insurance. The Property and Casualty Insurance segment offers commercial and personal lines of property and casualty insurance, as well as assumed reinsurance products. Its commercial policies include fire and allied lines, other liability, automobile, workers' compensation, and surety coverage; and personal lines consists of automobile, and fire and allied lines coverage, including homeowners. The Life Insurance segment underwrites deferred and immediate fixed annuities; universal life insurance products; and traditional life insurance products, such as term life insurance and whole life insurance products. The company sells its products through a network of independent agencies. United Fire Group, Inc. was founded in 1946 and is headquartered in Cedar Rapids, Iowa.
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.
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