Cincinnati Financial Corp Earnings Cheat Sheet: Revenue Falls After Two Straight Increases as Profit Drops

S&P 500 (NYSE:SPY) component Cincinnati Financial Corporation (NASDAQ:CINF) reported its results for the third quarter. Cincinnati Financial markets property casualty insurance.

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Cincinnati Financial Earnings Cheat Sheet for the Third Quarter

Results: Net income for the property and casualty insurance company fell to $19 million (12 cents per share) vs. $156 million (95 cents per share) a year earlier. This is a decline of 87.8% from the year earlier quarter.

Revenue: Fell 11.9% to $944 million from the year earlier quarter.

Actual vs. Wall St. Expectations: CINF fell short of the mean analyst estimate of 13 cents per share. Analysts were expecting revenue of $931.2 million.

Quoting Management: Steven J. Johnston, president and chief executive officer, commented, “Cincinnati Financial’s operating income edged back into positive territory for the third quarter, dampened by catastrophe losses above our historical average third-quarter level but well below the unprecedented second-quarter 2011 level. We believe operating income is a good barometer of a property casualty insurer’s performance for a specific period, as it excludes realized capital gains and losses that are timed at our discretion and do not correlate with our underlying business performance in that period. Third-quarter comparisons of our 2011 and 2010 revenues and net income are skewed by the small capital loss realized this year versus the unusually high capital gains we harvested in last year’s third quarter, when we chose to sell a single large investment holding after its successful initial public offering.”

Key Stats:

A year-over-year revenue decrease last quarter snaps a streak of two consecutive quarters of revenue increases. Revenue rose 11% in the second quarter and 4.7% in the first quarter.

The company fell short of estimates last quarter after beating the mark the quarter before with a loss of -57 cents versus a mean estimate of a loss of 64 cents per share.

Looking Forward: Over the past sixty days, the outlook for the company’s performance next quarter has become increasingly unfavorable. The average estimate for the fourth quarter is 44 cents per share, a drop from 45 cents. For the fiscal year, the average estimate has moved down from 60 cents a share to 35 cents over the last thirty days.

Competitors to Watch: American Financial Group (NYSE:AFG), Selective Insurance Group (NASDAQ:SIGI), United Fire & Casualty (NASDAQ:UFCS), CNA Financial Corporation (NYSE:CNA), Harleysville Group Inc. (NASDAQ:HGIC), Markel Corporation (NYSE:MKL), W.R. Berkley Corporation (NYSE:WRB), The Travelers Companies, Inc. (NYSE:TRV), Old Republic Intl. Corp. (NYSE:ORI), and The Hanover Insurance Group, Inc. (NYSE:THG).

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(Source: Xignite Financials)