Cincinnati Financial (CINF) vs. American Financial Group (AFG) Head to Head Review

Cincinnati Financial (NASDAQ: CINF) and American Financial Group (NYSE:AFG) are both large-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, valuation and dividends.

Valuation & Earnings

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This table compares Cincinnati Financial and American Financial Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cincinnati Financial $5.73 billion 2.15 $1.05 billion $2.74 27.35
American Financial Group $6.87 billion 1.48 $475.00 million $6.55 17.55

Cincinnati Financial has higher earnings, but lower revenue than American Financial Group. American Financial Group is trading at a lower price-to-earnings ratio than Cincinnati Financial, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

63.3% of Cincinnati Financial shares are owned by institutional investors. Comparatively, 62.3% of American Financial Group shares are owned by institutional investors. 7.1% of Cincinnati Financial shares are owned by insiders. Comparatively, 13.7% of American Financial Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Cincinnati Financial has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500. Comparatively, American Financial Group has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500.

Dividends

Cincinnati Financial pays an annual dividend of $2.12 per share and has a dividend yield of 2.8%. American Financial Group pays an annual dividend of $1.40 per share and has a dividend yield of 1.2%. 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. American Financial Group pays out 21.4% of its earnings in the form of a dividend. Cincinnati Financial has raised its dividend for 57 consecutive years and American Financial Group has raised its dividend for 12 consecutive years. Cincinnati Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Cincinnati Financial and American Financial Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cincinnati Financial 0 3 0 0 2.00
American Financial Group 0 1 2 0 2.67

Cincinnati Financial currently has a consensus price target of $71.00, suggesting a potential downside of 5.24%. American Financial Group has a consensus price target of $114.67, suggesting a potential downside of 0.27%. Given American Financial Group’s stronger consensus rating and higher possible upside, analysts clearly believe American Financial Group is more favorable than Cincinnati Financial.

Profitability

This table compares Cincinnati Financial and American Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cincinnati Financial 18.23% 5.99% 2.13%
American Financial Group 6.92% 11.09% 0.99%

Summary

Cincinnati Financial beats American Financial Group on 9 of the 17 factors compared between the two stocks.

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.

American Financial Group Company Profile

American Financial Group, Inc. (AFG) is a holding company engaged primarily in property and casualty insurance businesses. The Company, through Great American Insurance Group, focuses on commercial products for businesses, and is engaged in the sale of fixed and fixed-indexed annuities in the retail, financial institutions and education markets. It has four segments: Property and casualty insurance, Annuity, Run-off long-term care and life, and Other. It reports its property and casualty insurance business in specialty sub-segments, including Property and transportation, Specialty casualty and Specialty financial. AFG sells traditional fixed and fixed-indexed annuities in the retail, financial institutions and education markets through independent producers and through direct relationships with certain financial institutions. AFG also sells single premium annuities in financial institutions through direct relationships with certain banks and through independent agents and brokers.

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