Critical Contrast: Majestic Capital (OTCMKTS:MAJCQ) and Cincinnati Financial (NASDAQ:CINF)

Cincinnati Financial (NASDAQ:CINF) and Majestic Capital (OTCMKTS:MAJCQ) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, risk, valuation, dividends and profitability.

Insider and Institutional Ownership

65.2% of Cincinnati Financial shares are held by institutional investors. 2.8% of Cincinnati Financial shares are held by insiders. Comparatively, 14.3% of Majestic Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations for Cincinnati Financial and Majestic Capital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cincinnati Financial	0	2	5	0	2.71
Majestic Capital	0	0	0	0	0.00

Cincinnati Financial currently has a consensus price target of $138.57, indicating a potential downside of 13.48%. Given Majestic Capital’s higher probable upside, analysts plainly believe Majestic Capital is more favorable than Cincinnati Financial.

Earnings and Valuation

This table compares Cincinnati Financial and Majestic Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cincinnati Financial	$10.01 billion	2.50	$1.84 billion	$19.46	8.23
Majestic Capital	N/A	N/A	N/A	N/A	N/A

Cincinnati Financial has higher revenue and earnings than Majestic Capital.

Profitability

This table compares Cincinnati Financial and Majestic Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cincinnati Financial	25.26%	8.25%	3.06%
Majestic Capital	N/A	N/A	N/A

Summary

Cincinnati Financial beats Majestic Capital on 7 of the 9 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 Majestic Capital

Majestic Capital, Ltd., through its subsidiaries, provides workers’ compensation insurance products. The company underwrites workers’ compensation insurance products through independent insurance brokers and agents to various size businesses; and excess and frequency coverage policies to self-insured entities. It offers primary workers’ compensation insurance to employers in Alaska, Arizona, California, Florida, Hawaii, Idaho, Illinois, Montana, Nevada, New Jersey, New Mexico, New York, Oregon, Utah, Virginia, and Washington. The company also engages in underwriting reinsurance. In addition, it offers various management services, including general management, underwriting, risk assessment, general recordkeeping, and regulatory compliance services; safety and loss control services; and claims management services to self-insured groups under fee-for-service arrangements. Further, the company acts as a broker for insurers and places the excess coverage for the groups. It serves transportation, healthcare, wholesale and retail, manufacturing, and hospitality industries; contractors; and colleges and universities. Majestic Capital, Ltd. was formerly known as CRM Holdings, Ltd. and changed its name to Majestic Capital, Ltd. in May 2010. Majestic Capital, Ltd. was founded in 1999 and is based in Hamilton, Bermuda.