Critical Analysis: Donegal Group (DGICB) and Its Competitors

Donegal Group (NASDAQ:DGICB) is one of 57 publicly-traded companies in the “INS – PROP&CASLTY” industry, but how does it contrast to its peers? We will compare Donegal Group to related companies based on the strength of its profitability, earnings, dividends, institutional ownership, analyst recommendations, valuation and risk.

Dividends

Donegal Group pays an annual dividend of $0.66 per share and has a dividend yield of 3.4%. Donegal Group pays out 32.2% of its earnings in the form of a dividend. As a group, “INS – PROP&CASLTY” companies pay a dividend yield of 0.9% and pay out 6.8% of their earnings in the form of a dividend. Donegal Group has raised its dividend for 5 consecutive years.

Analyst Recommendations

This is a summary of current recommendations for Donegal Group and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Donegal Group	0	1	0	0	2.00
Donegal Group Competitors	597	3384	3596	239	2.44

As a group, “INS – PROP&CASLTY” companies have a potential upside of 7.32%. Given Donegal Group’s peers stronger consensus rating and higher possible upside, analysts clearly believe Donegal Group has less favorable growth aspects than its peers.

Profitability

This table compares Donegal Group and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Donegal Group	8.11%	12.81%	3.29%
Donegal Group Competitors	14.02%	13.65%	4.31%

Institutional and Insider Ownership

1.2% of Donegal Group shares are held by institutional investors. Comparatively, 65.0% of shares of all “INS – PROP&CASLTY” companies are held by institutional investors. 8.6% of Donegal Group shares are held by company insiders. Comparatively, 10.5% of shares of all “INS – PROP&CASLTY” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Donegal Group and its peers top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Donegal Group	$978.01 million	$79.34 million	9.39
Donegal Group Competitors	$24.99 billion	$4.08 billion	8.66

Donegal Group’s peers have higher revenue and earnings than Donegal Group. Donegal Group is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Risk and Volatility

Donegal Group has a beta of 0.04, suggesting that its stock price is 96% less volatile than the S&P 500. Comparatively, Donegal Group’s peers have a beta of 0.76, suggesting that their average stock price is 24% less volatile than the S&P 500.

Summary

Donegal Group peers beat Donegal Group on 13 of the 15 factors compared.

About Donegal Group

Donegal Group Inc., an insurance holding company, provides personal and commercial lines of property and casualty insurance to businesses and individuals in the Mid-Atlantic, Midwestern, New England, and southern states. It operates through four segments: Investment Function, Personal Lines of Insurance, and Commercial Lines of Insurance. The company offers private passenger automobile policies that provide protection against liability for bodily injury and property damage arising from automobile accidents, as well as protection against loss from damage to automobiles. It also offers homeowners policies, which provide coverage for damage to residences and their contents from a range of perils, including fire, lightning, windstorm, and theft; and liability of the insured arising from injury to other persons or their property. In addition, the company offers commercial automobile policies that provide protection against liability for bodily injury and property damage arising from automobile accidents and protection against loss from damage to automobiles owned by the insured; commercial multi-peril policies that provide protection to businesses against various perils, primarily combining liability and physical damage coverages; and workers' compensation policies, which provide benefits to employees for injuries sustained during employment. The company markets its insurance products through a network of approximately 2,400 independent insurance agencies. Donegal Group Inc. was founded in 1986 and is headquartered in Marietta, Pennsylvania.