3 Reasons CINF is Risky and 1 Stock to Buy Instead

Cincinnati Financial has been treading water for the past six months, holding steady at $160.32. The stock also fell short of the S&P 500's 16.8% gain during that period.

Is there a buying opportunity in Cincinnati Financial, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it's free.

We're sitting this one out for now. Here are three reasons you should be careful with CINF, plus one stock we'd rather own.

While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.

Cincinnati Financial's EPS grew at an unimpressive 18.4% compounded annual growth rate over the last two years. On the bright side, this performance was higher than its 12% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.

An insurer's book value per share (BVPS) increases when it maintains a profitable pre-tax profit margin and effectively manages its investment portfolio.

Over the next 12 months, Consensus estimates call for Cincinnati Financial's BVPS to grow by 4.7% to $103.25, lousy growth rate.

Cincinnati Financial's business quality ultimately falls short of our standards. With its shares lagging the market recently, the stock trades at 1.5× forward P/B (or $160.32 per share). Beauty is in the eye of the beholder, but we don't really see a big opportunity at the moment. We're fairly confident there are better stocks to buy right now. Let us point you toward the most dominant software business in the world.

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