Cincinnati Financial (NASDAQ:CINF) versus The Hanover Insurance Group (NYSE:THG) Financial Comparison

Cincinnati Financial (NASDAQ:CINF) and The Hanover Insurance Group (NYSE:THG) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, institutional ownership, profitability, risk and dividends.

Dividends

Cincinnati Financial pays an annual dividend of $3.48 per share and has a dividend yield of 2.5%. The Hanover Insurance Group pays an annual dividend of $3.60 per share and has a dividend yield of 2.2%. Cincinnati Financial pays out 24.0% of its earnings in the form of a dividend. The Hanover Insurance Group pays out 30.8% 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 increased its dividend for 65 consecutive years and The Hanover Insurance Group has increased its dividend for 20 consecutive years. Cincinnati Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Cincinnati Financial has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500. Comparatively, The Hanover Insurance Group has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Cincinnati Financial and The Hanover Insurance Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cincinnati Financial	0	1	5	0	2.83
The Hanover Insurance Group	0	5	4	0	2.44

Cincinnati Financial presently has a consensus target price of $151.00, indicating a potential upside of 7.89%. The Hanover Insurance Group has a consensus target price of $175.25, indicating a potential upside of 7.31%. Given Cincinnati Financial’s stronger consensus rating and higher possible upside, research analysts plainly believe Cincinnati Financial is more favorable than The Hanover Insurance Group.

Valuation and Earnings

This table compares Cincinnati Financial and The Hanover Insurance Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cincinnati Financial	$11.34 billion	1.93	$2.29 billion	$14.52	9.64
The Hanover Insurance Group	$6.22 billion	0.94	$426.00 million	$11.69	13.97

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

Profitability

This table compares Cincinnati Financial and The Hanover Insurance Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cincinnati Financial	20.22%	9.01%	3.37%
The Hanover Insurance Group	6.83%	18.01%	3.23%

Institutional & Insider Ownership

65.2% of Cincinnati Financial shares are owned by institutional investors. Comparatively, 86.6% of The Hanover Insurance Group shares are owned by institutional investors. 2.8% of Cincinnati Financial shares are owned by company insiders. Comparatively, 2.5% of The Hanover Insurance Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Cincinnati Financial beats The Hanover Insurance Group on 14 of the 17 factors compared between the two stocks.

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.

About The Hanover Insurance Group

The Hanover Insurance Group, Inc., through its subsidiaries, provides various property and casualty insurance products and services in the United States. The company operates through four segments: Core Commercial, Specialty, Personal Lines, and Other. The Commercial Lines segment offers commercial multiple peril, commercial automobile, workers' compensation, and other commercial lines coverage. The Specialty segment provides professional and executive Lines, marine, and surety and other, as well as specialty property and casualty, such as program business, specialty industrial business, excess and surplus business, and specialty general liability coverage. The Personal Lines segment offers personal automobile and homeowner's coverages, as well as other personal coverages, such as personal umbrella, inland marine, fire, personal watercraft, personal cyber, and other miscellaneous coverages. The Other segment markets investment advisory services to institutions, insurance companies, pension funds, and other organizations. The Hanover Insurance Group, Inc. markets its products and services through independent agents and brokers. The company was formerly known as Allmerica Financial Corp. and changed its name to The Hanover Insurance Group, Inc. in December 2005. The Hanover Insurance Group, Inc. was founded in 1852 and is headquartered in Worcester, Massachusetts.