Employers Holdings (NYSE: EIG) and Cincinnati Financial Corporation (NASDAQ:CINF) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.
Valuation and Earnings
This table compares Employers Holdings and Cincinnati Financial Corporation’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Employers Holdings||$779.80 million||2.01||$106.70 million||$3.19||15.16|
|Cincinnati Financial Corporation||$5.45 billion||2.22||$591.00 million||$3.02||24.37|
Cincinnati Financial Corporation has higher revenue and earnings than Employers Holdings. Employers Holdings is trading at a lower price-to-earnings ratio than Cincinnati Financial Corporation, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
77.5% of Employers Holdings shares are owned by institutional investors. Comparatively, 62.7% of Cincinnati Financial Corporation shares are owned by institutional investors. 4.0% of Employers Holdings shares are owned by insiders. Comparatively, 9.3% of Cincinnati Financial Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Employers Holdings pays an annual dividend of $0.60 per share and has a dividend yield of 1.2%. Cincinnati Financial Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.7%. Employers Holdings pays out 18.8% of its earnings in the form of a dividend. Cincinnati Financial Corporation pays out 66.2% 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. Employers Holdings has raised its dividend for 56 consecutive years.
This is a breakdown of current recommendations and price targets for Employers Holdings and Cincinnati Financial Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Cincinnati Financial Corporation||0||4||1||0||2.20|
Employers Holdings currently has a consensus price target of $44.50, suggesting a potential downside of 7.96%. Cincinnati Financial Corporation has a consensus price target of $77.33, suggesting a potential upside of 5.07%. Given Cincinnati Financial Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Cincinnati Financial Corporation is more favorable than Employers Holdings.
This table compares Employers Holdings and Cincinnati Financial Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Cincinnati Financial Corporation||8.93%||5.85%||2.03%|
Risk and Volatility
Employers Holdings has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500. Comparatively, Cincinnati Financial Corporation has a beta of 0.91, suggesting that its stock price is 9% less volatile than the S&P 500.
Employers Holdings Company Profile
Employers Holdings, Inc. is a holding company. Through its insurance subsidiaries, the Company provides workers’ compensation insurance coverage to select, small businesses in low to medium hazard industries. It provides workers’ compensation insurance under a statutory system wherein employers are required to provide coverage for their employees’ medical, disability, vocational rehabilitation, and/or death benefit costs for work-related injuries or illnesses. As of December 31, 2016 the Company provided workers’ compensation insurance in 36 states and the District of Columbia, with a concentration in California. Its insurance subsidiaries include Employers Insurance Company of Nevada (EICN), Employers Compensation Insurance Company (ECIC), Employers Preferred Insurance Company (EPIC) and Employers Assurance Company (EAC). The Company’s insurance products are jointly offered and marketed with and through its partners and alliances.
Cincinnati Financial Corporation Company Profile
Cincinnati Financial Corporation is an insurance holding company. It operates through five segments: Commercial lines insurance, Personal lines insurance, Excess and surplus lines insurance, and Life insurance and Investments. Its Commercial Lines Insurance Segment provides five commercial business lines: commercial casualty, commercial property, commercial auto, workers’ compensation and other commercial lines. Its personal lines property insurance segment writes personal lines coverage in accounts that include both auto and homeowner coverages, as well as coverages that are part of its other personal business line. The excess and surplus lines Insurance segment covers business risks with characteristics, such as the nature of the business or its claim history that are difficult to profitably insure in the standard commercial lines market. The life insurance business lines include term life insurance, universal life insurance, worksite products and whole life insurance.
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