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Shares of Cincinnati Financial Corporation CINF have rallied 47.1% year to date (YTD), outperforming the industry’s 28.2% growth. The insurer also outperformed the Zacks S&P 500 composite and the Finance sector’s return of 27.7% and 21.3%, respectively, YTD. With a market capitalization of $23.79 billion, the average volume of shares traded in the last three months was 0.5 million.
CINF Outperformed Industry, Sector, S&P
Image Source: Zacks Investment Research
This Zacks Rank #3 (Hold) property and casualty insurance's bottom line outpaced estimates in three of the trailing four quarters while missed in one, the average surprise being 12.54%.
The rally was driven by a higher level of insured exposure, rate increases, agent-focused business models, consistent cash flow and effective capital deployment.
CINF Trading Above 50-Day and 200-Day Moving Average
Currently priced at $152.22, the stock is trading above its 50-day and 200-day simple moving average (SMA) of $146.82 and $128.89, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
CINF’s Growth Projection Encourages
The Zacks Consensus Estimate for Cincinnati Financial’s 2024 earnings per share indicates a year-over-year increase of 4.6%. The consensus estimate for revenues is pegged at $9.92 billion, implying a year-over-year improvement of 11.6%. The consensus estimate for 2025 earnings per share and revenues indicates an increase of 14.9% and 12.7%, respectively, from the 2024 estimates.
CINF’s Favorable Return on Capital
Return on equity in the trailing 12 months was 8.2%, better than the industry average of 7.7%. This highlights the company’s efficiency in utilizing shareholders’ funds.
Can the Stock Retain the Momentum?
Prudent pricing, an agent-centric model, a higher level of insured exposures and disciplined expansion of Cincinnati Re should benefit premiums, the primary driver of an insurer’s top line. CINF boasts above-average industry premium growth.
The Excess and Surplus line has been performing well since its inception in 2008. This segment should continue to benefit from new business-written premiums, higher renewal-written premiums and higher average renewal estimated pricing. Technology and data are also used to identify new exposures in emerging businesses.
Improving interest income from fixed-maturity securities and a decrease in equity portfolio dividends in an improved rate environment should drive net investment income.
Notably, its free cash flow conversion has remained more than 150% over the last few quarters, reflecting its solid earnings.