Cincinnati Financial Corporation (NASDAQ: CINF) and ProAssurance Corporation (NYSE:PRA) are both mid-cap financials companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, analyst recommendations, earnings and valuation.

Dividends

Cincinnati Financial Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.7%. ProAssurance Corporation pays an annual dividend of $1.24 per share and has a dividend yield of 2.1%. Cincinnati Financial Corporation pays out 66.0% of its earnings in the form of a dividend. ProAssurance Corporation pays out 46.1% 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 Corporation has raised its dividend for 56 consecutive years. Cincinnati Financial Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

62.2% of Cincinnati Financial Corporation shares are owned by institutional investors. Comparatively, 79.3% of ProAssurance Corporation shares are owned by institutional investors. 9.3% of Cincinnati Financial Corporation shares are owned by insiders. Comparatively, 1.8% of ProAssurance Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Cincinnati Financial Corporation and ProAssurance Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Cincinnati Financial Corporation $5.45 billion 2.21 $591.00 million $3.03 24.23
ProAssurance Corporation $870.21 million 3.63 $151.08 million $2.69 21.99

Cincinnati Financial Corporation has higher revenue and earnings than ProAssurance Corporation. ProAssurance Corporation 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.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Cincinnati Financial Corporation and ProAssurance 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
ProAssurance Corporation 0 4 0 0 2.00

Cincinnati Financial Corporation currently has a consensus target price of $77.33, indicating a potential upside of 5.32%. ProAssurance Corporation has a consensus target price of $58.00, indicating a potential downside of 1.94%. Given Cincinnati Financial Corporation’s stronger consensus rating and higher possible upside, equities analysts clearly believe Cincinnati Financial Corporation is more favorable than ProAssurance Corporation.

Volatility & Risk

Cincinnati Financial Corporation has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500. Comparatively, ProAssurance Corporation has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500.

Profitability

This table compares Cincinnati Financial Corporation and ProAssurance 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%
ProAssurance Corporation 16.18% 6.75% 2.50%

Summary

Cincinnati Financial Corporation beats ProAssurance Corporation on 11 of the 17 factors compared between the two stocks.

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.

ProAssurance Corporation Company Profile

ProAssurance Corporation (ProAssurance) is a holding company for property and casualty insurance companies. The Company provides professional liability insurance for healthcare professionals and facilities, professional liability insurance for attorneys, liability insurance for medical technology and life sciences risks, and workers’ compensation insurance. The Company operates through four segments. The Specialty property and casualty segment includes the Company’s professional liability business, and medical technology and life sciences business. The Workers’ compensation segment includes its workers’ compensation business. Lloyd’s Syndicate 1729 (Syndicate 1729) segment includes business of Syndicate 1729, which underwrites risks over a range of property and casualty insurance and reinsurance lines. The Corporate segment includes the Company’s investment operations managed at the corporate level and non-premium revenues generated outside of its insurance entities.

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