Property casualty insurer Cincinnati Financial (NASDAQ: CINF) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 12.2% year on year to $3.73 billion. Its non-GAAP profit of $2.85 per share was 38.4% above analysts’ consensus estimates.

Is now the time to buy Cincinnati Financial? Find out by accessing our full research report, it’s free for active Edge members.

Company Overview

Founded in 1950 by independent insurance agents seeking stable market options for their clients, Cincinnati Financial (NASDAQ: CINF) provides property casualty insurance, life insurance, and related financial services through independent agencies across 46 states.

Revenue Growth

Insurance companies earn revenue from three primary sources: 1) The core insurance business itself, often called underwriting and represented in the income statement as premiums 2) Income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities 3) Fees from various sources such as policy administration, annuities, or other value-added services. Over the last five years, Cincinnati Financial grew its revenue at a mediocre 6% compounded annual growth rate. This was below our standard for the insurance sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Cincinnati Financial’s annualized revenue growth of 11.2% over the last two years is above its five-year trend, suggesting its demand recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Cincinnati Financial reported year-on-year revenue growth of 12.2%, and its $3.73 billion of revenue exceeded Wall Street’s estimates by 24.2%.

Net premiums earned made up 82.3% of the company’s total revenue during the last five years, meaning Cincinnati Financial barely relies on non-insurance activities to drive its overall growth.

While insurers generate revenue from multiple sources, investors view net premiums earned as the cornerstone - its direct link to core operations stands in sharp contrast to the unpredictability of investment returns and fees.

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Book Value Per Share (BVPS)

Insurance companies are balance sheet businesses, collecting premiums upfront and paying out claims over time. The float – premiums collected but not yet paid out – are invested, creating an asset base supported by a liability structure. Book value captures this dynamic by measuring:

• Assets (investment portfolio, cash, reinsurance recoverables) - liabilities (claim reserves, debt, future policy benefits)

BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality. While other (and more commonly known) per-share metrics like EPS can sometimes be lumpy due to reserve releases or one-time items and can be managed or skewed while still following accounting rules, BVPS reflects long-term capital growth and is harder to manipulate.

Cincinnati Financial’s BVPS grew at a solid 10.3% annual clip over the last five years. BVPS growth has also accelerated recently, growing by 20.8% annually over the last two years from $67.71 to $98.76 per share.

Over the next 12 months, Consensus estimates call for Cincinnati Financial’s BVPS to remain flat at roughly $93.62, a disappointing projection.

Key Takeaways from Cincinnati Financial’s Q3 Results

We were impressed by how significantly Cincinnati Financial blew past analysts’ book value per share expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 2% to $160.79 immediately after reporting.

Sure, Cincinnati Financial had a solid quarter, but if we look at the bigger picture, is this stock a buy? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.