Cincinnati Financial (NASDAQ:CINF) and Travelers Companies (NYSE:TRV) are both large-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, dividends, risk, profitability and earnings.
Volatility & Risk
Cincinnati Financial has a beta of 0.51, meaning that its stock price is 49% less volatile than the S&P 500. Comparatively, Travelers Companies has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.
Analyst Ratings
This is a summary of current ratings and price targets for Cincinnati Financial and Travelers Companies, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Cincinnati Financial | 2 | 3 | 1 | 0 | 1.83 |
| Travelers Companies | 4 | 8 | 4 | 0 | 2.00 |
Cincinnati Financial presently has a consensus price target of $76.7143, indicating a potential upside of 12.72%. Travelers Companies has a consensus price target of $127.6875, indicating a potential upside of 11.45%. Given Cincinnati Financial's higher probable upside, equities research analysts clearly believe Cincinnati Financial is more favorable than Travelers Companies.
Dividends
Cincinnati Financial pays an annual dividend of $2.40 per share and has a dividend yield of 3.5%. Travelers Companies pays an annual dividend of $3.40 per share and has a dividend yield of 3.0%. Cincinnati Financial pays out 57.1% of its earnings in the form of a dividend. Travelers Companies pays out 35.4% 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 59 consecutive years and Travelers Companies has raised its dividend for 11 consecutive years. Cincinnati Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional and Insider Ownership
62.8% of Cincinnati Financial shares are held by institutional investors. Comparatively, 80.7% of Travelers Companies shares are held by institutional investors. 7.4% of Cincinnati Financial shares are held by company insiders. Comparatively, 0.8% of Travelers Companies shares are held by company 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.
Earnings and Valuation
This table compares Cincinnati Financial and Travelers Companies' revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Cincinnati Financial | $7.92 billion | 1.38 | $2.00 billion | $4.20 | 16.20 |
| Travelers Companies | $31.58 billion | 0.92 | $2.62 billion | $9.60 | 11.93 |
Travelers Companies has higher revenue and earnings than Cincinnati Financial. Travelers Companies 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 Travelers Companies' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Cincinnati Financial | 25.20% | 7.24% | 2.69% |
| Travelers Companies | 7.61% | 9.61% | 2.24% |
Summary
Travelers Companies beats Cincinnati Financial on 9 of the 17 factors compared between the two stocks.
