Cincinnati Financial’s (CINF) first quarter earnings disappointed the Zacks Consensus Estimate, primarily due to lower-than-expected earned premium. Its Commercial Lines segment prime premium contributor has been suffering from soft market conditions, exerting downward pressure on pricing and restricting growth.
Not much improvement is expected here in 2010. However, its Personal Lines segment is expected to clock modest positive growth. Then again, we remain cautious on the investment portfolio with an above-average equity concentration.
Our six-month target price of $24.00 equates to about 14.8X our earnings estimate for 2010. We view $1.58 per common share annual dividend as secure, implying a negative return of about 6.9%.Zacks Investment Research
