Cincinnati Financial (NASDAQ:CINF) and Old Republic International (NYSE:ORI) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, profitability, risk, analyst recommendations and dividends.
Volatility & Risk
Cincinnati Financial has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500. Comparatively, Old Republic International has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500.
Analyst Ratings
This is a breakdown of recent recommendations for Cincinnati Financial and Old Republic International, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Cincinnati Financial | 2 | 2 | 1 | 0 | 1.80 |
| Old Republic International | 0 | 0 | 0 | 1 | 4.00 |
Cincinnati Financial currently has a consensus price target of $77.00, indicating a potential downside of 22.98%. Old Republic International has a consensus price target of $21.00, indicating a potential upside of 5.21%. Given Old Republic International's stronger consensus rating and higher possible upside, analysts clearly believe Old Republic International is more favorable than Cincinnati Financial.
Dividends
Cincinnati Financial pays an annual dividend of $2.40 per share and has a dividend yield of 2.4%. Old Republic International pays an annual dividend of $0.84 per share and has a dividend yield of 4.2%. Cincinnati Financial pays out 57.1% of its earnings in the form of a dividend. Old Republic International pays out 45.7% 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 raised its dividend for 39 consecutive years and Old Republic International has raised its dividend for 1 consecutive years. Old Republic International is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings & Valuation
This table compares Cincinnati Financial and Old Republic International's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Cincinnati Financial | $7.92 billion | 2.03 | $2.00 billion | $4.20 | 23.80 |
| Old Republic International | $7.21 billion | 0.84 | $1.06 billion | $1.84 | 10.85 |
Cincinnati Financial has higher revenue and earnings than Old Republic International. Old Republic International 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 Old Republic International's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Cincinnati Financial | N/A | 5.14% | 1.88% |
| Old Republic International | 4.85% | 10.24% | 2.77% |
Institutional & Insider Ownership
65.3% of Cincinnati Financial shares are owned by institutional investors. Comparatively, 72.6% of Old Republic International shares are owned by institutional investors. 7.4% of Cincinnati Financial shares are owned by insiders. Comparatively, 1.9% of Old Republic International shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Summary
Old Republic International beats Cincinnati Financial on 10 of the 18 factors compared between the two stocks.
