Attractive Price-to-Earnings Ratio
Low Price-to-Sales Ratio
Strong Net Profit Margin
High Return on Equity
Low Debt Levels
Strong Liquidity Ratios
Strong Operating Performance
Robust Premium Growth
Financial Strength and Flexibility
Capital Management and Dividend Growth
Positive Outlook for Reinsurance Market
Moderate EV/EBITDA Ratio
Operating Profit Margin
Interest Coverage Ratio
Impact of Catastrophic Losses
Potential Pricing Cycle Moderation
Cincinnati Financial Corporation demonstrates strong business quality through excellent operating metrics, robust growth, and financial stability. Future prospects remain positive, though potential challenges from catastrophic losses and pricing cycle moderation need to be monitored closely.
Analysis Date: February 11, 2025
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$564.93
Current Market Price: $132.00
IV/P Ratio: 4.28x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
77.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for CINF
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (8.97)
P/B ratio ≤ 1.5 (1.48)
Current ratio ≥ 2.0 (1.16x)
Long-term debt < Net current assets (0.45x)
Margin of safety (77.0%)
CINF does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
CINF's net profit margin of 20.22% indicates strong profitability after accounting for all expenses, which is above average for the industry.
With a return on equity of 17.24%, CINF demonstrates effective use of equity financing to generate profits.
The operating profit margin of 12.05% is decent but could be improved to enhance overall profitability.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
17.24%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
1.11%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
100.00%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
20.22%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
CINF has a debt-to-equity ratio of 0.06, indicating very low reliance on debt for financing, which is a strong point for financial stability.
Current, quick, and cash ratios all at approximately 1.16 show that the company is well-positioned to cover its short-term obligations.
While the interest coverage ratio is high at 25.77, it is important to maintain this level to ensure ongoing financial health.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.06x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.16x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Cincinnati Financial Corporation reported strong operating performance with a combined ratio of 93.4% for the full year 2024, showcasing improvement in underwriting efficiency. This indicates effective cost management and profitability within the insurance sector.
The company experienced significant premium growth, with a 17% increase in net written premiums for Q4 2024. The growth was driven by strong retention rates and new business development, indicating effective underwriting practices.
Cincinnati Financial maintains a strong financial position with total shareholders' equity of nearly $14 billion and a debt-to-capital ratio under 10%, demonstrating financial resilience and capability for future investments.
The company has a strong history of returning capital to shareholders with a 7% increase in dividends planned for April 2025, extending their streak to 65 years, which reflects confidence in future performance.
Cincinnati Re is expected to remain profitable and capitalize on opportunities in the reinsurance market, indicating a proactive approach to risk management and growth in premium income.
The recent California wildfires are expected to incur estimated losses of $450 to $525 million, which could impact short-term profitability despite the long-term resilience and planning measures in place.
Concerns about moderation in pricing cycles, particularly in commercial lines, may affect future premium growth, requiring careful monitoring of underwriting practices.