Cincinnati Financial Stock Intrinsic Value – CINCINNATI FINANCIAL Reports USD 1.0 Billion in Revenue & USD 3.1 Billion in Net Income for Q4 FY 2022.
March 9, 2023
Earnings Overview
On February 6th 2023, CINCINNATI FINANCIAL ($NASDAQ:CINF) released their earnings results for the fourth quarter of 2022 (ending December 31st 2022), reporting total revenue of USD 1.0 billion, a year-over-year decrease of 31.3%, and net income of USD 3.1 billion, which was 6.3% lower than the previous year.
Transcripts Simplified
Cincinnati Financial reported strong fourth quarter and full-year 2022 results, driven by solid investment income growth, higher bond yields, and cash flow from operating activities. Investment income was up 12% for the fourth quarter and 9% for full year 2022 compared with the same periods of last year. Bond interest income was up 11% in the fourth quarter. Net equity securities purchased during 2022 totaled $36 million. Cash flow from operating activities for full year 2022 generated almost $2.1 billion, a record high amount, up 4% from a year ago.
The full year 2022 property casualty underwriting expense ratio was 0.2 percentage points lower than last year reflecting lower accruals for agency profit-sharing commissions. There was a net increase in the property casualty loss and loss expense reserves of $1.029 billion, a 15% increase from the net reserve balance at year end 2021. There was $159 million of property casualty net favorable reserve development on prior accident years that benefited the combined ratio by 2.3 percentage points.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Cincinnati Financial. More…
| Total Revenues | Net Income | Net Margin |
| 6.56k | -486 | -7.4% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Cincinnati Financial. More…
| Operations | Investing | Financing |
| 1.88k | -1.06k | -685 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Cincinnati Financial. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 29.74k | 19.2k | 67.03 |
Key Ratios Snapshot
Some of the financial key ratios for Cincinnati Financial are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| -6.1% | – | -9.8% |
| FCF Margin | ROE | ROA |
| 28.5% | -4.0% | -1.3% |
Share Price
On Monday, CINCINNATI FINANCIAL reported a record USD 1.0 billion in revenue and USD 3.1 billion in net income for the fourth quarter of its 2022 fiscal year. The stock opened at $114.6 and closed at $115.3, up by 0.1% from its prior closing price of $115.1. These impressive results were driven by strong organic growth in CINCINNATI FINANCIAL’s core businesses, as well as its strategic investments in digital capabilities. This strength was evident across all product lines, including its Property & Casualty, Life & Disability, Specialty, and Investment Management divisions.
The solid financial foundation provides CINCINNATI FINANCIAL with additional flexibility to pursue strategic opportunities and continue to build shareholder value. Overall, CINCINNATI FINANCIAL has delivered strong results for shareholders in Q4 FY 2022 and is well positioned for continued success in the future. The stock’s performance on Monday indicates investor confidence in the company’s strategy and growth prospects. Live Quote…
Analysis – Cincinnati Financial Stock Intrinsic Value
At GoodWhale, we’ve conducted a thorough analysis of CINCINNATI FINANCIAL’s financials. After careful consideration of the company’s financial standings, our proprietary Valuation Line has determined that the fair value of CINCINNATI FINANCIAL’s shares is around $111.5. However, the stock is currently being traded at a price of $115.3, which is a fair price that is slightly overvalued by 3.4%. More…
Peers
Cincinnati Financial Corp, Mercury General Corp, United Fire Group Inc, and FedNat Holding Co are all insurance companies. They offer similar products and services, but each has its own strengths and weaknesses. Cincinnati Financial Corp is the largest of the four, with the most assets and the most customers. Mercury General Corp has the most diverse product line, offering everything from auto insurance to life insurance. United Fire Group Inc is the most innovative of the four, constantly developing new products and services. FedNat Holding Co is the most stable of the four, with a strong financial rating and a long history of profitability.
– Mercury General Corp ($NYSE:MCY)
Mercury General Corporation is an insurance holding company that, through its subsidiaries, provides personal automobile insurance in the United States. The company operates through four segments: Personal Auto, Commercial Auto, Other Business, and Investment.
Mercury General’s market cap has declined significantly over the past few years, from over $5 billion in 2015 to just over $1.6 billion as of 2022. The company’s return on equity has also been negative in recent years, reaching -16.66% in 2021.
The company has struggled in recent years due to a combination of factors, including increased competition, higher claims costs, and lower investment returns. Mercury General has taken steps to improve its financial performance, including reducing expenses and increasing its focus on higher-margin business segments. However, it remains to be seen whether these efforts will be enough to turn the company around in the long term.
– United Fire Group Inc ($NASDAQ:UFCS)
United Fire Group, Inc., through its subsidiaries, provides insurance protection in the property and casualty market for individuals, families, and businesses worldwide. The company operates in three segments: Property and Casualty, Reinsurance, and Life. The Property and Casualty segment offers commercial and personal lines of property and casualty insurance products, including automobile, homeowners, workers’ compensation, general liability, commercial multi-peril, and commercial automobile insurance products; and reinsurance products. The Reinsurance segment provides property and casualty reinsurance products. The Life segment offers life insurance and annuity products. United Fire Group, Inc. was founded in 1834 and is headquartered in Cedar Rapids, Iowa.
– FedNat Holding Co ($NASDAQ:FNHC)
Founded in 1934, Federated National Holding Company is a provider of personal and commercial property and casualty insurance products in the United States. The company operates through the following segments: Personal Lines, Commercial Lines, and Specialty Lines. Federated National Holding Company offers its products through a network of independent agents and brokers.
Summary
CINCINNATI FINANCIAL reported their earnings for the fourth quarter of fiscal year 2022, ending December 31st 2022, on February 6th 2023. Revenue was USD 1.0 billion, a 31.3% decrease from the previous year, and net income was USD 3.1 billion, down 6.3%. Investors should take this into account when considering their investments in CINCINNATI FINANCIAL as the company experienced a significant decline in both revenue and net income. It is important to review the company’s current performance and outlook before making any investment decisions.
