Essent Group (NYSE: ESNT) and Cincinnati Financial Corporation (NASDAQ:CINF) are both mid-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitabiliy, analyst recommendations, dividends, risk, valuation and institutional ownership.

Dividends

Cincinnati Financial Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.5%. Essent Group does not pay a dividend. Cincinnati Financial Corporation pays out 57.3% of its earnings in the form of a dividend. Essent Group has raised its dividend for 56 consecutive years.

Insider and Institutional Ownership

86.1% of Essent Group shares are owned by institutional investors. Comparatively, 63.0% of Cincinnati Financial Corporation shares are owned by institutional investors. 18.1% of Essent Group shares are owned by company insiders. Comparatively, 9.3% of Cincinnati Financial Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Essent Group and Cincinnati Financial Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Essent Group 50.92% 19.26% 13.77%
Cincinnati Financial Corporation 10.33% 6.57% 2.28%

Analyst Recommendations

This is a breakdown of recent recommendations for Essent Group and Cincinnati Financial Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Essent Group 0 4 3 0 2.43
Cincinnati Financial Corporation 0 4 1 0 2.20

Essent Group presently has a consensus price target of $40.60, suggesting a potential upside of 1.45%. Cincinnati Financial Corporation has a consensus price target of $77.33, suggesting a potential downside of 3.69%. Given Essent Group’s stronger consensus rating and higher possible upside, research analysts plainly believe Essent Group is more favorable than Cincinnati Financial Corporation.

Volatility and Risk

Essent Group has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, Cincinnati Financial Corporation has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500.

Valuation & Earnings

This table compares Essent Group and Cincinnati Financial Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Essent Group $483.38 million 7.73 $336.17 million $2.82 14.19
Cincinnati Financial Corporation $5.62 billion 2.34 $890.00 million $3.49 23.01

Cincinnati Financial Corporation has higher revenue and earnings than Essent Group. Essent Group is trading at a lower price-to-earnings ratio than Cincinnati Financial Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Essent Group beats Cincinnati Financial Corporation on 12 of the 17 factors compared between the two stocks.

Essent Group Company Profile

Essent Group Ltd. is a private mortgage insurance company. The Company is engaged in offering private mortgage insurance and reinsurance for mortgages secured by residential properties located in the United States. Its products and services include mortgage insurance, contract underwriting, and Bermuda-based insurance and reinsurance. The Company’s primary mortgage insurance is offered to customers on individual loans at the time of origination on a flow basis, but can also be written in bulk transactions. Its pool insurance provides additional credit enhancement for certain secondary market and other mortgage transactions. The primary mortgage insurance operations were conducted through Essent Guaranty, Inc. which is a mortgage insurer licensed to write mortgage insurance in all 50 states and the District of Columbia, as of December 31, 2016. It offers primary mortgage insurance, pool insurance and master policy. It provides contract underwriting services through CUW Solutions, LLC.

Cincinnati Financial Corporation Company Profile

Cincinnati Financial Corporation is an insurance holding company. It operates through five segments: Commercial lines insurance, Personal lines insurance, Excess and surplus lines insurance, and Life insurance and Investments. Its Commercial Lines Insurance Segment provides five commercial business lines: commercial casualty, commercial property, commercial auto, workers’ compensation and other commercial lines. Its personal lines property insurance segment writes personal lines coverage in accounts that include both auto and homeowner coverages, as well as coverages that are part of its other personal business line. The excess and surplus lines Insurance segment covers business risks with characteristics, such as the nature of the business or its claim history that are difficult to profitably insure in the standard commercial lines market. The life insurance business lines include term life insurance, universal life insurance, worksite products and whole life insurance.

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