The stock of Cincinnati Financial (USA: CINF, 30 year financial data) seems to be valued fairly according to the GuruFocus value calculation. The GuruFocus Value is GuruFocus’ estimate of the fair value at which the stock should be traded. The calculation is based on the historical multiples at which the share traded, past business growth and analyst estimates of future business development. If a stock’s price is well above the GF value line, it is overvalued and its future return is likely to be poor. On the other hand, the future return is likely to be higher if it is well below the GF value line. With a current price of $ 120.35 per share and a market cap of $ 19.4 billion, Cincinnati Financial stock is believed to have fair value. The GF score for Cincinnati Financial is shown in the table below.
Since Cincinnati Financial is fairly valued, the long-term return on its stocks should be close to the business’s growth rate, which averaged 10.4% over the past five years.
It is always important to check a company’s financial strength before buying its stock. Investing in companies with low financial strength has a higher risk of permanent losses. With view on Cash-to-Debt Ratio Interest coverage is a great way to understand a company’s financial strength. Cincinnati Financial has a cash-to-debt ratio of 1.05, which is worse than 66% of companies in the insurance industry. The overall financial strength of Cincinnati Financial is 6 out of 10, which indicates that Cincinnati Financial’s financial strength is fair. Here is Cincinnati Financial’s debt and cash over the past few years:
Companies that have been consistently profitable over the long term offer less risk to investors who may want to buy stocks. Higher profit margins usually require a better investment compared to a company with lower profit margins. Cincinnati Financial has been profitable 10 over the past 10 years. For the past twelve months, the company had sales of $ 9.9 billion and earnings of $ 18.91 per share. It is The operating margin is 0.00%.which ranks in the bottom 10% of companies in the insurance industry. Overall, Cincinnati Financial’s profitability ranks 7th out of 10, which indicates fair profitability. This is Cincinnati Financial’s sales and net income for the past few years:
Growth is probably one of the most important factors in evaluating a company. Research by GuruFocus has shown that growth is closely related to the long-term performance of a company’s stocks. When a company’s business is growing, the company usually creates value for its shareholders, especially when the growth is profitable. When a company’s sales and earnings decrease, so does the company’s value. Cincinnati Financials 3 year average sales growth rate is better than 74% of companies in the insurance industry. Cincinnati Financial’s average 3-year EBITDA growth rate is 25.9%, exceeding 86% of companies in the insurance industry.
Another way to evaluate a company’s profitability is to compare its return on investment (ROIC) to its weighted cost of capital (WACC). Return on investment (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the average rate a company has to pay to all security holders to fund its assets. When the ROIC is higher than the WACC, it means the company is creating value for shareholders. For the past 12 months, Cincinnati Financial’s ROIC was 12.17 while its WACC was 5.47. Cincinnati Financial’s historical comparison of ROIC and WACC is shown below:
In short, Cincinnati Financial (USA: CINF, 30 year financial data) The share is rated as fair. The company’s financial situation is fair and profitability is fair. The growth is over 86% of companies in the insurance industry. To learn more about Cincinnati Financial stock, you can check out theirs 30 year financial data here.
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