Analyzing Cincinnati Financial (NASDAQ:CINF) & Chubb (NASDAQ:CB)

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

Insider and Institutional Ownership

64.1% of Cincinnati Financial shares are owned by institutional investors. Comparatively, 89.5% of Chubb shares are owned by institutional investors. 7.2% of Cincinnati Financial shares are owned by insiders. Comparatively, 0.5% of Chubb shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Cincinnati Financial has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500. Comparatively, Chubb has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500.

Dividends

Cincinnati Financial pays an annual dividend of $2.24 per share and has a dividend yield of 2.0%. Chubb pays an annual dividend of $3.00 per share and has a dividend yield of 1.9%. Cincinnati Financial pays out 66.9% of its earnings in the form of a dividend. Chubb pays out 31.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cincinnati Financial has increased its dividend for 58 consecutive years and Chubb has increased its dividend for 53 consecutive years. Cincinnati Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations for Cincinnati Financial and Chubb, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cincinnati Financial 0 2 2 0 2.50
Chubb 3 4 4 1 2.25

Cincinnati Financial currently has a consensus price target of $108.75, suggesting a potential downside of 5.06%. Chubb has a consensus price target of $153.00, suggesting a potential downside of 4.07%. Given Chubb’s higher probable upside, analysts clearly believe Chubb is more favorable than Cincinnati Financial.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cincinnati Financial $5.41 billion 3.46 $287.00 million $3.35 34.19
Chubb $33.80 billion 2.15 $3.96 billion $9.44 16.90

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

Profitability

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

Net Margins Return on Equity Return on Assets
Cincinnati Financial 18.28% 7.17% 2.64%
Chubb 11.00% 8.53% 2.60%

Summary

Chubb beats Cincinnati Financial on 10 of the 18 factors compared between the two stocks.

About Cincinnati Financial

Cincinnati Financial Corporation, together with its subsidiary, 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 various 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; and whole life insurance products, as well as markets 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; and insurance brokerage services. Cincinnati Financial Corporation was founded in 1950 and is headquartered in Fairfield, Ohio.

About Chubb

Chubb Limited, through its subsidiaries, provides insurance and reinsurance products worldwide. The company's North America Commercial P&C Insurance segment offers commercial property, marine, general casualty, workers' compensation, package policies, and risk management; professional lines, marine, construction, environmental, medical, cyber risk, surety, and excess casualty; and group accident and health insurance to large, middle market, and small commercial businesses in the United States, Canada, and Bermuda. Its North America Personal P&C Insurance segment provides affluent and high net worth individuals and families with homeowners, automobile and collector cars, valuable articles, personal and excess liability, travel insurance, and recreational marine insurance and services in the United States and Canada. The company's North America Agricultural Insurance segment offers multiple peril crop and crop-hail insurance; and coverage for farm and ranch property, and commercial agriculture products. Its Overseas General Insurance segment provides coverage for traditional commercial property and casualty; specialty categories, such as financial lines, marine, energy, aviation, political risk, and construction risk; and group accident and health, and traditional and specialty personal lines for corporations, middle markets, and small customers through retail brokers, agents, and other channels. The company's Global Reinsurance segment offers traditional and specialty reinsurance under the Chubb Tempest Re brand name to property and casualty companies. Its Life Insurance segment provides protection and savings products comprising whole life, endowment plans, individual term life, group term life, medical and health, personal accident, credit life, universal life, and unit linked contracts. The company was formerly known as ACE Limited and changed its name to Chubb Limited in January 2016. Chubb Limited was founded in 1985 and is headquartered in Zurich, Switzerland.

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