Comparison of Cincinnati Financial (NASDAQ:CINF) and Heritage Insurance (NYSE:HRTG)


Cincinnati Financial (NASDAQ: CINF – Get Rating) and Heritage Insurance (NYSE: HRTG – Get Rating) are both finance companies, but which is the best investment? We will compare the two companies based on the strength of their profitability, analyst recommendations, risk, institutional ownership, dividends, valuation and earnings.

Valuation and benefits

This chart compares revenue, earnings per share (EPS), and valuation of Cincinnati Financial and Heritage Insurance.

Gross revenue Price/sales ratio Net revenue Earnings per share Price/earnings ratio
Cincinnati Financial $9.63 billion 2.28 $2.95 billion $18.11 7.55
Wealth insurance $631.56 million 0.25 -$74.73 million ($2.71) -2.20

Cincinnati Financial has higher revenues and profits than Heritage Insurance. Heritage Insurance trades at a lower price-to-earnings ratio than Cincinnati Financial, indicating that it is currently the more affordable of the two stocks.

Volatility and risk

Cincinnati Financial has a beta of 0.63, suggesting its stock price is 37% less volatile than the S&P 500. By comparison, Heritage Insurance has a beta of 0.54, suggesting its stock price is 46% less volatile than the S&P 500.

Profitability

This chart compares the net margins, return on equity, and return on assets of Cincinnati Financial and Heritage Insurance.

Net margins Return on equity return on assets
Cincinnati Financial 30.59% 8.70% 3.50%
Wealth Insurance -11.83% -3.56% -0.66%

Dividends

Cincinnati Financial pays an annual dividend of $2.76 per share and has a dividend yield of 2.0%. Heritage Insurance pays an annual dividend of $0.24 per share and has a dividend yield of 4.0%. Cincinnati Financial pays 15.2% of its profits as a dividend. Heritage Insurance pays -8.9% of its profits as a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings over the next few years. Cincinnati Financial has increased its dividend for 62 consecutive years. Heritage Insurance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Cincinnati Financial and Heritage Insurance, as reported by MarketBeat.com.

Sales Ratings Hold odds Buy reviews Strong buy odds Rating
Cincinnati Financial 0 3 1 0 2.25
Wealth insurance 0 0 2 0 3.00

Cincinnati Financial currently has a consensus price target of $126.00, indicating a potential downside of 7.80%. Heritage Insurance has a consensus price target of $12.00, indicating a potential upside of 101.68%. Given Heritage Insurance’s stronger consensus rating and higher upside potential, analysts clearly believe Heritage Insurance is more favorable than Cincinnati Financial.

Insider and Institutional Ownership

65.7% of Cincinnati Financial shares are held by institutional investors. By comparison, 60.9% of Heritage Insurance shares are held by institutional investors. 3.0% of Cincinnati Financial stock is held by insiders of the company. By comparison, 8.5% of Heritage Insurance shares are held by company insiders. Strong institutional ownership indicates that hedge funds, large money managers, and endowments believe a company is poised for long-term growth.

Summary

Cincinnati Financial beats Heritage Insurance on 11 of 17 factors compared between the two stocks.

Cincinnati Financial Company Profile (Get a rating)

Cincinnati Financial Corporation, together with its subsidiaries, provides property and casualty insurance products in the United States. The Company operates through five segments: Commercial Insurance, Personal Insurance, Excess and Excess Insurance, Life Insurance and Investments. The Commercial Lines Insurance segment provides coverage for commercial accident, commercial property, commercial automobile and workers’ compensation. It also provides directors’ and officers’ liability insurance, contractual and commercial bonds and loyalty bonds; and machinery and equipment coverage. The Personal Insurance segment offers personal automobile insurance; Home Insurance; and residential fire, inland marine, personal liability and watercraft insurance for individuals. The Excess and Surplus Lines Insurance segment offers commercial liability insurance that covers companies for liability for accidents occurring on their premises or resulting from their activities, such as injuries to products; and commercial property insurance, which insures buildings, inventory, equipment and business income against loss or damage from various causes, such as fire, wind, hail, water, theft and vandalism. The Life Insurance segment offers term life insurance products; universal life insurance products; construction site products, such as temporary life; and whole life insurance products. The Investments segment invests in investments with fixed maturities, including taxable and tax-exempt bonds and redeemable preferred shares; and equity investments including common and non-redeemable preferred shares. The company also offers commercial leasing and financing services; and insurance brokerage services. Cincinnati Financial Corporation was founded in 1950 and is headquartered in Fairfield, Ohio.

Heritage Insurance Company Profile (Get a rating)

Heritage Insurance Holdings, Inc., through its subsidiaries, offers personal and commercial home insurance products. The company offers personal residential property insurance for single family homeowners and condominium owners, as well as rental property insurance in the states of Alabama, California, Connecticut, Delaware, Florida , Georgia, Hawaii, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, and Virginia; commercial residential insurance for properties in Florida, New Jersey and New York; and licensed in the State of Pennsylvania, as well as residential property and personal wind insurance. It also provides catering, emergency and recovery services; and property management and reinsurance services. The company writes personal lines insurance policies through a network of independent retail agents, wholesale agents and a direct agency partnership, as well as indirectly to approximately 1,500 retail outlets through eight wholesale agency relationships; and personal and commercial insurance policies through a network of approximately 70 independent agencies. Heritage Insurance Holdings, Inc. was founded in 2012 and is headquartered in Tampa, Florida.



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About Bobby F. Lopez

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