CNA Financial (NYSE:CNA) and Cincinnati Financial (NASDAQ:CINF) are both large-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, profitability, valuation, earnings and analyst recommendations.
Profitability
This table compares CNA Financial and Cincinnati Financial's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| CNA Financial | 5.41% | 5.75% | 1.09% |
| Cincinnati Financial | N/A | 5.14% | 1.88% |
Institutional & Insider Ownership
99.0% of CNA Financial shares are held by institutional investors. Comparatively, 65.3% of Cincinnati Financial shares are held by institutional investors. 0.2% of CNA Financial shares are held by company insiders. Comparatively, 7.4% of Cincinnati Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Analyst Recommendations
This is a summary of recent ratings for CNA Financial and Cincinnati Financial, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| CNA Financial | 1 | 0 | 0 | 0 | 1.00 |
| Cincinnati Financial | 2 | 2 | 1 | 0 | 1.80 |
CNA Financial currently has a consensus target price of $37.00, indicating a potential downside of 8.37%. Cincinnati Financial has a consensus target price of $72.8333, indicating a potential downside of 22.27%. Given CNA Financial's higher possible upside, analysts plainly believe CNA Financial is more favorable than Cincinnati Financial.
Earnings and Valuation
This table compares CNA Financial and Cincinnati Financial's gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| CNA Financial | $10.77 billion | 1.02 | $1 billion | $3.59 | 11.25 |
| Cincinnati Financial | $7.92 billion | 1.90 | $2.00 billion | $4.20 | 22.31 |
Cincinnati Financial has lower revenue, but higher earnings than CNA Financial. CNA Financial is trading at a lower price-to-earnings ratio than Cincinnati Financial, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
CNA Financial has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, Cincinnati Financial has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500.
Dividends
CNA Financial pays an annual dividend of $1.48 per share and has a dividend yield of 3.7%. Cincinnati Financial pays an annual dividend of $2.40 per share and has a dividend yield of 2.6%. CNA Financial pays out 41.2% of its earnings in the form of a dividend. Cincinnati Financial pays out 57.1% 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 39 consecutive years. CNA Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.
Summary
Cincinnati Financial beats CNA Financial on 9 of the 17 factors compared between the two stocks.
