Reviewing Cincinnati Financial (CINF) & Amerisafe (AMSF)

Cincinnati Financial (NASDAQ:CINF) and Amerisafe (NASDAQ:AMSF) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, institutional ownership, valuation, earnings and dividends.

Earnings & Valuation

This table compares Cincinnati Financial and Amerisafe’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cincinnati Financial $5.73 billion 2.22 $1.05 billion $2.74 28.49
Amerisafe $375.21 million 3.31 $46.23 million $3.08 20.91

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

Volatility and Risk

Cincinnati Financial has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500. Comparatively, Amerisafe has a beta of 0.52, meaning that its stock price is 48% less volatile than the S&P 500.

Insider and Institutional Ownership

62.3% of Cincinnati Financial shares are owned by institutional investors. 9.3% of Cincinnati Financial shares are owned by insiders. Comparatively, 1.8% of Amerisafe shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Cincinnati Financial 22.61% 6.70% 2.48%
Amerisafe 14.15% 15.21% 4.33%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Cincinnati Financial and Amerisafe, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cincinnati Financial 1 3 0 0 1.75
Amerisafe 0 2 2 0 2.50

Cincinnati Financial presently has a consensus target price of $70.00, indicating a potential downside of 10.31%. Amerisafe has a consensus target price of $64.00, indicating a potential downside of 0.62%. Given Amerisafe’s stronger consensus rating and higher possible upside, analysts clearly believe Amerisafe is more favorable than Cincinnati Financial.

Dividends

Cincinnati Financial pays an annual dividend of $2.12 per share and has a dividend yield of 2.7%. Amerisafe pays an annual dividend of $0.88 per share and has a dividend yield of 1.4%. 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. Amerisafe pays out 28.6% of its earnings in the form of a dividend. Cincinnati Financial has raised its dividend for 57 consecutive years and Amerisafe has raised its dividend for 4 consecutive years. Cincinnati Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

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

About Cincinnati Financial

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.

About Amerisafe

AMERISAFE, Inc., an insurance holding company, provides workers' compensation insurance in the United States. Its workers' compensation insurance policies provide benefits to injured employees for temporary or permanent disability, death, and medical and hospital expenses. The company serves small to mid-sized employers involved in construction, trucking, logging and lumber, manufacturing, agriculture, maritime, oil and gas, and other industries through agencies. AMERISAFE, Inc. was incorporated in 1985 and is based in DeRidder, Louisiana.

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