Allied World Assurance (AWHHF) and Cincinnati Financial (CINF) Financial Contrast

Cincinnati Financial (NASDAQ: CINF) and Allied World Assurance (OTCMKTS:AWHHF) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, valuation, risk, earnings, institutional ownership and dividends.

Analyst Ratings

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This is a breakdown of recent ratings and price targets for Cincinnati Financial and Allied World Assurance, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cincinnati Financial 0 3 0 0 2.00
Allied World Assurance 0 1 0 0 2.00

Cincinnati Financial presently has a consensus price target of $71.00, indicating a potential downside of 1.89%. Allied World Assurance has a consensus price target of $24.50, indicating a potential downside of 52.47%. Given Cincinnati Financial’s higher probable upside, equities analysts plainly believe Cincinnati Financial is more favorable than Allied World Assurance.

Risk & Volatility

Cincinnati Financial has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500. Comparatively, Allied World Assurance has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Earnings and Valuation

This table compares Cincinnati Financial and Allied World Assurance’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cincinnati Financial $5.73 billion 2.07 $1.05 billion $2.74 26.41
Allied World Assurance N/A N/A N/A N/A N/A

Cincinnati Financial has higher revenue and earnings than Allied World Assurance.

Insider & Institutional Ownership

63.3% of Cincinnati Financial shares are owned by institutional investors. Comparatively, 86.5% of Allied World Assurance shares are owned by institutional investors. 7.1% of Cincinnati Financial shares are owned by insiders. Comparatively, 3.2% of Allied World Assurance shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Cincinnati Financial pays an annual dividend of $2.12 per share and has a dividend yield of 2.9%. Allied World Assurance pays an annual dividend of $0.52 per share and has a dividend yield of 1.0%. Cincinnati Financial pays out 77.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cincinnati Financial has raised its dividend for 57 consecutive years. Cincinnati Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Cincinnati Financial 18.23% 5.99% 2.13%
Allied World Assurance 12.56% 8.96% 2.42%

Summary

Cincinnati Financial beats Allied World Assurance on 7 of the 11 factors compared between the two stocks.

About Cincinnati Financial

Cincinnati Financial Corporation 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 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 offered to employees through their employer; and whole life insurance products, as well as markets disability income insurance, 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. Cincinnati Financial Corporation was founded in 1950 and is headquartered in Fairfield, Ohio.

About Allied World Assurance

Allied World Assurance Company Holdings Ltd is a Germany-based holding company. It provides property, casualty and specialty insurance and reinsurance solutions to clients around the world. The Company operates in three segments: North American Insurance, Global Markets Insurance and Reinsurance. The North American Insurance segment consists of the Company’s direct insurance operations in the United States, Bermuda and Canada. The Global Markets Insurance segment includes all of the Company’s direct insurance operations outside of North America. The Company’s reinsurance segment includes the reinsurance of property, general casualty, professional liability, specialty lines and property catastrophe coverage’s written by other reinsurance companies. The Company leases space in Australia, Bermuda, Canada, Hong Kong, Ireland, Labuan, Singapore, the United Kingdom and the United States for the operation of its North American Insurance, Global Markets Insurance and Reinsurance segments.

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