WR Berkley (NYSE:WRB – Get Rating) and Cincinnati Financial (NASDAQ:CINF – Get Rating) are both large-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, risk, earnings, valuation, analyst recommendations, dividends and institutional ownership.
This table compares WR Berkley and Cincinnati Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider & Institutional Ownership
49.9% of WR Berkley shares are held by institutional investors. Comparatively, 66.3% of Cincinnati Financial shares are held by institutional investors. 22.4% of WR Berkley shares are held by company insiders. Comparatively, 3.0% of Cincinnati Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Risk and Volatility
WR Berkley has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500. Comparatively, Cincinnati Financial has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500.
This is a summary of current recommendations and price targets for WR Berkley and Cincinnati Financial, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
WR Berkley currently has a consensus target price of $67.30, suggesting a potential upside of 0.10%. Cincinnati Financial has a consensus target price of $131.33, suggesting a potential upside of 5.05%. Given Cincinnati Financial’s higher possible upside, analysts plainly believe Cincinnati Financial is more favorable than WR Berkley.
Valuation & Earnings
This table compares WR Berkley and Cincinnati Financial’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|W.R. Berkley||$9.46 billion||1.89||$1.02 billion||$4.96||13.55|
|Cincinnati Financial||$9.63 billion||2.08||$2.95 billion||$12.59||9.93|
Cincinnati Financial has higher revenue and earnings than WR Berkley. Cincinnati Financial is trading at a lower price-to-earnings ratio than WR Berkley, indicating that it is currently the more affordable of the two stocks.
WR Berkley pays an annual dividend of $0.35 per share and has a dividend yield of 0.5%. Cincinnati Financial pays an annual dividend of $2.76 per share and has a dividend yield of 2.2%. WR Berkley pays out 7.1% of its earnings in the form of a dividend. Cincinnati Financial pays out 21.9% 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. WR Berkley has raised its dividend for 21 consecutive years and Cincinnati Financial has raised its dividend for 62 consecutive years. Cincinnati Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Cincinnati Financial beats WR Berkley on 10 of the 17 factors compared between the two stocks.
W.R. Berkley Company Profile (GetRating)
WR Berkley Corporation, an insurance holding company, operates as a commercial lines writer in the United States and internationally. It operates in two segments, Insurance and Reinsurance & Monoline Excess. The Insurance segment underwrites commercial insurance business, including premises operations, commercial automobile, property, products liability, and general and professional liability lines. It also provides workers’ compensation insurance products; accident and health insurance and reinsurance products; insurance for commercial risks; specialty environmental products for contractors, consultants, and property owners and facilities operators; specialized insurance coverages for fine arts and jewelry exposures; umbrella and excess liability coverage products; and liquor liability and inland marine coverage for small to medium-sized insureds. In addition, this segment offers directors and officers, and insurance risk products, as well as products for technology, and life sciences and travel industries; cyber risk solutions; casualty, group life, and crime and fidelity related insurance products; personal lines insurance solutions, including home, condo/co-op, auto, and collectibles; automobile, law enforcement, public officials and educator’s legal, and employment practices liability, as well as incidental medical insurance products; and at-risk and alternative risk insurance program management services. The Reinsurance & Monoline Excess segment provides other insurance companies and self-insureds with assistance in managing their net risk through reinsurance on a portfolio basis through treaty reinsurance or on an individual basis through facultative reinsurance. WR Berkley Corporation was founded in 1967 and is based in Greenwich, Connecticut.
Cincinnati Financial Company Profile (GetRating)
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; home owner 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.
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