We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Cincinnati Financial (CINF) Down 3.4% Since the Last Earnings Report?
Read MoreHide Full Article
More than a month has gone by since the last earnings report for Cincinnati Financial Corporation (CINF - Free Report) . Shares have lost about 3.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Cincinnati Financial Q3 Earnings Beat, Plunge Y/Y
Cincinnati Financial Corporation reported third-quarter 2017 operating income of 58 cents per share that beat the Zacks Consensus Estimate of 53 cents by 9.4%. However, the bottom line deteriorated 32.6% year over year, mainly due to the unprecedented hurricane activity during the reported quarter.
Including net realized investment gains of 3 cents per share, the company’s net income plummeted 43.5% year over year to 61 cents per share.
Operational Update
Total operating revenue in the quarter was $1.4 billion, up 4.4% year over year. The top-line growth was driven by 4.7% higher premiums earned and a 3.4% rise in investment income. Revenues beat the Zacks Consensus Estimate by 0.9%.
Total benefits and expenses of Cincinnati Financial increased 11.7% year over year to $1.3 billion, primarily due to higher insurance losses and contract holders’ benefits plus underwriting, acquisition and insurance expenses.
Combined ratio — a measure of underwriting profitability — deteriorated 690 basis points (bps) year over year to 99.3%.
Cincinnati Financial had 1,704 agency relationships as of Sep 30, 2017 compared with 1,614 as of Dec 31, 2016.
Quarterly Segment Update
Commercial Lines Insurance: Total revenue of $793 million grew 1.7% year over year. This upside was primarily driven by an increase in premiums earned. The company delivered an underwriting profit of $39 million, which plunged 45.8% from the year-ago quarter. Combined ratio also deteriorated 440 bps year over year to 95.2%.
Personal Lines Insurance: Total revenue of $315 million rose 7.1% year over year owing to a noticeable increase in premiums earned. The segment incurred an underwriting loss of $9 million, slightly wider than the year-ago loss of $8 million. Nonetheless, combined ratio improved 30 bps year over year to 103.1%.
Excess and Surplus Lines Insurance: Total revenue of $53 million increased 8.2% year over year, driven by higher premiums earned. The segment’s underwriting profit slumped 35% year over year to $13 million. Also, combined ratio deteriorated 1350 bps year over year to 74.8%.
Life Insurance: Total revenue of $97 million declined 5.8% year over year. Total benefits and expenses decreased 2.3% year over year to $85 million.
Financial Update
As of Sep 30, 2017, the property and casualty (P&C) insurer had assets worth $21.6 billion, up 5.9% from the 2016-end level.
Cincinnati Financial’s debt-to-capital ratio was 9.7% as of Sep 30, 2017. This reflects a slight improvement from 10.3% at the end of 2016.
As of Sep 30, 2017, Cincinnati Financial’s book value per share was a record high $45.86, up 6.8% from Dec 31, 2016.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
Cincinnati Financial Corporation Price and Consensus
Currently, Cincinnati Financial's stock has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Cincinnati Financial (CINF) Down 3.4% Since the Last Earnings Report?
More than a month has gone by since the last earnings report for Cincinnati Financial Corporation (CINF - Free Report) . Shares have lost about 3.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Cincinnati Financial Q3 Earnings Beat, Plunge Y/Y
Cincinnati Financial Corporation reported third-quarter 2017 operating income of 58 cents per share that beat the Zacks Consensus Estimate of 53 cents by 9.4%. However, the bottom line deteriorated 32.6% year over year, mainly due to the unprecedented hurricane activity during the reported quarter.
Including net realized investment gains of 3 cents per share, the company’s net income plummeted 43.5% year over year to 61 cents per share.
Operational Update
Total operating revenue in the quarter was $1.4 billion, up 4.4% year over year. The top-line growth was driven by 4.7% higher premiums earned and a 3.4% rise in investment income. Revenues beat the Zacks Consensus Estimate by 0.9%.
Total benefits and expenses of Cincinnati Financial increased 11.7% year over year to $1.3 billion, primarily due to higher insurance losses and contract holders’ benefits plus underwriting, acquisition and insurance expenses.
Combined ratio — a measure of underwriting profitability — deteriorated 690 basis points (bps) year over year to 99.3%.
Cincinnati Financial had 1,704 agency relationships as of Sep 30, 2017 compared with 1,614 as of Dec 31, 2016.
Quarterly Segment Update
Commercial Lines Insurance: Total revenue of $793 million grew 1.7% year over year. This upside was primarily driven by an increase in premiums earned. The company delivered an underwriting profit of $39 million, which plunged 45.8% from the year-ago quarter. Combined ratio also deteriorated 440 bps year over year to 95.2%.
Personal Lines Insurance: Total revenue of $315 million rose 7.1% year over year owing to a noticeable increase in premiums earned. The segment incurred an underwriting loss of $9 million, slightly wider than the year-ago loss of $8 million. Nonetheless, combined ratio improved 30 bps year over year to 103.1%.
Excess and Surplus Lines Insurance: Total revenue of $53 million increased 8.2% year over year, driven by higher premiums earned. The segment’s underwriting profit slumped 35% year over year to $13 million. Also, combined ratio deteriorated 1350 bps year over year to 74.8%.
Life Insurance: Total revenue of $97 million declined 5.8% year over year. Total benefits and expenses decreased 2.3% year over year to $85 million.
Financial Update
As of Sep 30, 2017, the property and casualty (P&C) insurer had assets worth $21.6 billion, up 5.9% from the 2016-end level.
Cincinnati Financial’s debt-to-capital ratio was 9.7% as of Sep 30, 2017. This reflects a slight improvement from 10.3% at the end of 2016.
As of Sep 30, 2017, Cincinnati Financial’s book value per share was a record high $45.86, up 6.8% from Dec 31, 2016.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
Cincinnati Financial Corporation Price and Consensus
Cincinnati Financial Corporation Price and Consensus | Cincinnati Financial Corporation Quote
VGM Scores
Currently, Cincinnati Financial's stock has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.