Comparing Cincinnati Financial (NASDAQ:CINF) & Heritage Insurance (NYSE:HRTG)

Cincinnati Financial (NASDAQ:CINFGet Rating) and Heritage Insurance (NYSE:HRTGGet Rating) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, analyst recommendations, risk, institutional ownership, dividends, valuation and earnings.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cincinnati Financial $9.63 billion 2.28 $2.95 billion $18.11 7.55
Heritage Insurance $631.56 million 0.25 -$74.73 million ($2.71) -2.20

Cincinnati Financial has higher revenue and earnings than Heritage Insurance. Heritage Insurance is trading at a lower price-to-earnings ratio than Cincinnati Financial, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Cincinnati Financial has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500. Comparatively, Heritage Insurance has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Cincinnati Financial 30.59% 8.70% 3.50%
Heritage Insurance -11.83% -3.56% -0.66%

Dividends

Cincinnati Financial pays an annual dividend of $2.76 per share and has a dividend yield of 2.0%. Heritage Insurance pays an annual dividend of $0.24 per share and has a dividend yield of 4.0%. Cincinnati Financial pays out 15.2% of its earnings in the form of a dividend. Heritage Insurance pays out -8.9% 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 has raised its dividend for 62 consecutive years. Heritage Insurance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Cincinnati Financial and Heritage Insurance, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cincinnati Financial 0 3 1 0 2.25
Heritage Insurance 0 0 2 0 3.00

Cincinnati Financial presently has a consensus price target of $126.00, indicating a potential downside of 7.80%. Heritage Insurance has a consensus price target of $12.00, indicating a potential upside of 101.68%. Given Heritage Insurance’s stronger consensus rating and higher possible upside, analysts plainly believe Heritage Insurance is more favorable than Cincinnati Financial.

Insider and Institutional Ownership

65.7% of Cincinnati Financial shares are held by institutional investors. Comparatively, 60.9% of Heritage Insurance shares are held by institutional investors. 3.0% of Cincinnati Financial shares are held by company insiders. Comparatively, 8.5% of Heritage Insurance shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Cincinnati Financial beats Heritage Insurance on 11 of the 17 factors compared between the two stocks.

Cincinnati Financial Company Profile (Get Rating)

Cincinnati Financial Corporation, together with its subsidiaries, provides property casualty insurance products in the United States. The company operates through five segments: Commercial Lines Insurance, Personal Lines Insurance, Excess and Surplus Lines Insurance, Life Insurance, and Investments. The Commercial Lines Insurance segment offers coverage for commercial casualty, commercial property, commercial auto, and workers' compensation. It also provides director and officer liability insurance, contract and commercial surety bonds, and fidelity bonds; and machinery and equipment coverage. The Personal Lines Insurance segment offers personal auto insurance; homeowner 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; and whole life insurance products. 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.

Heritage Insurance Company Profile (Get Rating)

Heritage Insurance Holdings, Inc., through its subsidiaries, provides personal and commercial residential insurance products. The company offers personal residential property insurance for single-family homeowners and condominium owners, and rental property insurance in the states of Alabama, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, and Virginia; commercial residential insurance for properties in Florida, New Jersey, and New York; and licensed in the state of Pennsylvania, as well as personal residential and wind-only property insurance. It also provides restoration, and emergency and recovery services; and property management, and reinsurance services. The company writes personal line policies through a network of retail independent agents, wholesale agents, and a partnership with a direct agency, as well as indirectly to approximately 1,500 retail locations through eight wholesale agency relationships; and personal and commercial insurance policies through a network of approximately 70 independent agencies. Heritage Insurance Holdings, Inc. was founded in 2012 and is headquartered in Tampa, Florida.

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