Cincinnati Financial (NASDAQ:CINF) and Universal Insurance (NYSE:UVE) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, profitability, dividends, valuation, risk, earnings and institutional ownership.
Profitability
This table compares Cincinnati Financial and Universal Insurance'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% |
Universal Insurance | -1.38% | -10.94% | -2.96% |
Volatility and Risk
Cincinnati Financial has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500. Comparatively, Universal Insurance has a beta of 1.08, suggesting that its share price is 8% more volatile than the S&P 500.
Dividends
Cincinnati Financial pays an annual dividend of $2.40 per share and has a dividend yield of 2.4%. Universal Insurance pays an annual dividend of $0.64 per share and has a dividend yield of 4.3%. Cincinnati Financial pays out 57.1% of its earnings in the form of a dividend. Universal Insurance pays out 54.2% 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. Universal Insurance is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Recommendations
This is a summary of recent ratings and recommmendations for Cincinnati Financial and Universal Insurance, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Cincinnati Financial | 2 | 2 | 1 | 0 | 1.80 |
Universal Insurance | 0 | 1 | 0 | 0 | 2.00 |
Cincinnati Financial currently has a consensus target price of $77.00, suggesting a potential downside of 23.88%. Universal Insurance has a consensus target price of $16.00, suggesting a potential upside of 8.47%. Given Universal Insurance's stronger consensus rating and higher possible upside, analysts plainly believe Universal Insurance is more favorable than Cincinnati Financial.
Earnings & Valuation
This table compares Cincinnati Financial and Universal Insurance's 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 | 2.05 | $2.00 billion | $4.20 | 24.09 |
Universal Insurance | $939.35 million | 0.49 | $46.51 million | $1.18 | 12.50 |
Cincinnati Financial has higher revenue and earnings than Universal Insurance. Universal Insurance is trading at a lower price-to-earnings ratio than Cincinnati Financial, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
65.3% of Cincinnati Financial shares are held by institutional investors. Comparatively, 71.9% of Universal Insurance shares are held by institutional investors. 7.4% of Cincinnati Financial shares are held by company insiders. Comparatively, 14.0% of Universal Insurance shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
Summary
Cincinnati Financial beats Universal Insurance on 10 of the 17 factors compared between the two stocks.