State Auto Financial (NASDAQ: STFC) and Cincinnati Financial (NASDAQ:CINF) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, dividends, valuation and profitability.
Risk & Volatility
State Auto Financial has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500. Comparatively, Cincinnati Financial has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500.
This is a breakdown of recent recommendations and price targets for State Auto Financial and Cincinnati Financial, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|State Auto Financial||0||1||0||0||2.00|
State Auto Financial currently has a consensus target price of $26.00, suggesting a potential downside of 13.01%. Cincinnati Financial has a consensus target price of $71.00, suggesting a potential downside of 5.37%. Given Cincinnati Financial’s higher probable upside, analysts plainly believe Cincinnati Financial is more favorable than State Auto Financial.
Earnings & Valuation
This table compares State Auto Financial and Cincinnati Financial’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|State Auto Financial||$1.42 billion||0.90||-$10.70 million||($0.26)||-114.96|
|Cincinnati Financial||$5.73 billion||2.15||$1.05 billion||$6.30||11.91|
Cincinnati Financial has higher revenue and earnings than State Auto Financial. State Auto Financial is trading at a lower price-to-earnings ratio than Cincinnati Financial, indicating that it is currently the more affordable of the two stocks.
State Auto Financial pays an annual dividend of $0.40 per share and has a dividend yield of 1.3%. Cincinnati Financial pays an annual dividend of $2.12 per share and has a dividend yield of 2.8%. State Auto Financial pays out -153.8% of its earnings in the form of a dividend. Cincinnati Financial pays out 33.7% 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. State Auto Financial has increased its dividend for 57 consecutive years.
Insider and Institutional Ownership
34.7% of State Auto Financial shares are held by institutional investors. Comparatively, 63.3% of Cincinnati Financial shares are held by institutional investors. 1.5% of State Auto Financial shares are held by insiders. Comparatively, 9.3% of Cincinnati Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
This table compares State Auto Financial and Cincinnati Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|State Auto Financial||-0.75%||-1.85%||-0.55%|
Cincinnati Financial beats State Auto Financial on 12 of the 15 factors compared between the two stocks.
About State Auto Financial
State Auto Financial Corporation is a property and casualty insurance holding company. The Company is engaged in writing personal, business and specialty insurance. Its segments include Personal Insurance Segment, Commercial Insurance Segment and Specialty Insurance Segment. Its Personal Insurance Segment include personal auto, homeowners and other personal; Commercial Insurance Segment include commercial auto, small commercial package, middle market commercial, workers’ compensation and other commercial, and Specialty Insurance Segment include Excess & Surplus (E&S) property, E&S casualty and programs. State Auto Financial’s subsidiaries include State Auto Property & Casualty Insurance Company (State Auto P&C), Milbank Insurance Company (Milbank) and State Auto Insurance Company of Ohio (SA Ohio), each of which is a property and casualty insurance company, and Stateco Financial Services, Inc., (Stateco), which provides investment management services to affiliated insurance companies.
About Cincinnati Financial
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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