Brown & Brown (NYSE:BRO – Get Free Report) and Cincinnati Financial (NASDAQ:CINF – Get Free Report) are both large-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, valuation, dividends, profitability and analyst recommendations.
Dividends
Brown & Brown pays an annual dividend of $0.66 per share and has a dividend yield of 1.1%. Cincinnati Financial pays an annual dividend of $3.76 per share and has a dividend yield of 2.3%. Brown & Brown pays out 20.8% of its earnings in the form of a dividend. Cincinnati Financial pays out 17.7% 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. Cincinnati Financial has raised its dividend for 65 consecutive years. Cincinnati Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Ratings
This is a breakdown of recent recommendations and price targets for Brown & Brown and Cincinnati Financial, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Brown & Brown | 1 | 14 | 4 | 0 | 2.16 |
| Cincinnati Financial | 0 | 3 | 1 | 1 | 2.60 |
Risk and Volatility
Brown & Brown has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500. Comparatively, Cincinnati Financial has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500.
Institutional and Insider Ownership
71.0% of Brown & Brown shares are owned by institutional investors. Comparatively, 65.2% of Cincinnati Financial shares are owned by institutional investors. 13.1% of Brown & Brown shares are owned by company insiders. Comparatively, 2.9% of Cincinnati Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Profitability
This table compares Brown & Brown and Cincinnati Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Brown & Brown | 17.75% | 13.17% | 5.56% |
| Cincinnati Financial | 23.84% | 9.63% | 3.70% |
Earnings & Valuation
This table compares Brown & Brown and Cincinnati Financial”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Brown & Brown | $5.90 billion | 3.42 | $1.05 billion | $3.17 | 19.00 |
| Cincinnati Financial | $12.63 billion | 1.97 | $2.39 billion | $21.20 | 7.66 |
Cincinnati Financial has higher revenue and earnings than Brown & Brown. Cincinnati Financial is trading at a lower price-to-earnings ratio than Brown & Brown, indicating that it is currently the more affordable of the two stocks.
About Brown & Brown
Brown & Brown, Inc. is an insurance agency, wholesale brokerage, insurance program and service organization. It engages in the provision of insurance brokerage services and casualty insurance underwriting services. It operates through the following segments: Retail, National Programs, Wholesale Brokerage, and Services. The Retail Segment receives fees in lieu of commissions. The National Programs segment acts as a managing general agent and provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches. The Wholesale Brokerage segment markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, as well as the company’s retail agents. The Services segment provides insurance-related services, including third-party claims administration and comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas, as well as Medicare Set-aside services, social security disability and Medicare benefits advocacy services and claims adjusting services. The company was founded by J. Adrian Brown and Charles Covington Owen in 1939 and is headquartered in Daytona Beach, FL.
About Cincinnati Financial
Cincinnati Financial Corporation, together with its subsidiaries, provides property casualty insurance products in the United States. It 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 contract and commercial surety bonds, and fidelity bonds; and machinery and equipment. The Personal Lines Insurance segment offers personal auto insurance; homeowner 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, as well as other coverages, including miscellaneous errors and omissions, professional liability, and excess liability; 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, as well as annuities. The Investments segment invests in fixed-maturity investments, including taxable and tax-exempt bonds, redeemable preferred stocks, and mortgage-backed securities; and equity investments comprising common and nonredeemable preferred stocks. It 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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