Cincinnati Financial Looks Good to Me

Cincinnati Financial Corp. (CINF) is another one of the newer additions to the virtual Million Dollar Portfolio. Yes, it's true that the company has been impacted by various catastrophic weather events in the recent news. However, this type of scenario has been previously addressed, in the post Allstate Will Weather the Storm. As with Allstate Corp. (ALL), Cincinnati Financial is in the business of providing insurance, and therefore shouldn't be hurt too badly by short-term events.

Fundamentally, the company looks pretty solid. The trailing price/earnings of 12.38 and forward price/earnings of 13.79 give an averaged forward & trailing price/earnings of 13.085, which is relatively low compared to Allstate's averaged trailing & forward price/earnings of 14.105 (which is also pretty low by the way). In addition, Cincinnati Financial also throws off a nice 3.10% dividend yield. Unlike Allstate, Cincinnati Financial is much smaller with a market cap of 7.32 Billion. This leaves much room to grow and/or possibly even be acquired at a nice premium, considering the company is currently trading at only 1.22 times book-value.

Cincinnati Financial Tidbits

MSN Money - 5 Ways to Profit from Buffett's Forecast - Jim Jubak has pretty favorable comments on Cincinnati Financial: "Of course, even a bad year for Cincinnati Financial would be a good year for most insurers. Commercial property and casualty insurance, one of the fastest growing parts of the company's business, showed a combined ratio of 87% in 2005."

ZACKS - Zacks' High Rank Value strategy highlights - "Many value investors look for stocks trading at Price/Earnings multiples below 15 and Price/Book multiples below 3. Combining these valuation measures with a Zacks Rank of #1 ("Strong Buy") or #2 ("Buy") helps to ensure that a stock is truly undervalued. The High Rank Value Profit Track strategy finds such bargains. "

Business Courier - Hurricane didn't dampen Cincinnati Financial's profits - "Despite a hit from Hurricane Katrina, Cincinnati Financial Corp. posted record net income for 2005. Its fourth-quarter results suffered somewhat, but still beat analysts' expectations."