Head-To-Head Review: Watford (NASDAQ:WTRE) versus Cincinnati Financial (NASDAQ:CINF)

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Watford (NASDAQ:WTRE) and Cincinnati Financial (NASDAQ:CINF) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, earnings, institutional ownership, valuation, dividends and risk.

Analyst Recommendations

This is a summary of current recommendations for Watford and Cincinnati Financial, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Watford 0 4 1 0 2.20
Cincinnati Financial 0 2 2 0 2.50

Watford presently has a consensus price target of $29.00, indicating a potential upside of 8.45%. Cincinnati Financial has a consensus price target of $108.75, indicating a potential upside of 2.95%. Given Watford’s higher possible upside, research analysts clearly believe Watford is more favorable than Cincinnati Financial.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Watford $575.23 million 1.00 -$34.88 million N/A N/A
Cincinnati Financial $5.41 billion 3.19 $287.00 million $3.35 31.53

Cincinnati Financial has higher revenue and earnings than Watford.

Insider and Institutional Ownership

18.8% of Watford shares are held by institutional investors. Comparatively, 63.1% of Cincinnati Financial shares are held by institutional investors. 16.6% of Watford shares are held by insiders. Comparatively, 7.2% of Cincinnati Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Cincinnati Financial pays an annual dividend of $2.24 per share and has a dividend yield of 2.1%. Watford does not pay a dividend. Cincinnati Financial pays out 66.9% of its earnings in the form of a dividend.

Profitability

This table compares Watford and Cincinnati Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Watford -2.81% -1.82% -0.49%
Cincinnati Financial 14.18% 7.44% 2.76%

Summary

Cincinnati Financial beats Watford on 10 of the 13 factors compared between the two stocks.

Watford Company Profile

Watford Holdings Ltd., together with its subsidiaries, operates as a property, casualty, and mortgage insurance and reinsurance company worldwide. The company was founded in 2013 and is headquartered in Pembroke, Bermuda.

Cincinnati Financial Company Profile

Cincinnati Financial Corporation, together with its subsidiary, provides property casualty insurance products in the United States. The company operates in five segments: Commercial Lines Insurance, Personal Lines Insurance, Excess and Surplus Lines Insurance, Life Insurance, and Investments. The Commercial Lines Insurance segment provides coverage for commercial casualty, commercial property, commercial auto, and workers' compensation. It also offers director and officer liability insurance, contract and commercial surety bonds, and fidelity bonds; coverage for property, liability, and business interruption; and machinery and equipment coverage. The Personal Lines Insurance segment provides personal auto insurance; homeowners insurance; and dwelling fire, inland marine, personal umbrella liability, and watercraft coverages to individuals. The Excess and Surplus Lines Insurance segment offers commercial casualty insurance that covers businesses for third-party liability from accidents occurring on their premises or arising out of their operations, such as injuries sustained from products; and commercial property insurance, which insures buildings, inventory, equipment, and business income from loss or damage due to various causes, such as fire, wind, hail, water, theft, and vandalism. The Life Insurance segment provides term life insurance products; universal life insurance products; worksite products, such as term life, whole life, and disability insurance; and whole life insurance products, as well as markets deferred annuities and immediate annuities. The Investments segment invests in fixed-maturity investments, including taxable and tax-exempt bonds, and redeemable preferred stocks; and equity investments comprising common and nonredeemable preferred stocks. 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.

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