Critical Contrast: Donegal Group (NASDAQ:DGICA) vs. Mercury General (NYSE:MCY)

Donegal Group (NASDAQ:DGICAGet Rating) and Mercury General (NYSE:MCYGet Rating) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, risk, dividends, profitability, institutional ownership and valuation.


This table compares Donegal Group and Mercury General’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Donegal Group -1.14% -0.34% -0.07%
Mercury General -9.15% -10.88% -2.58%

Insider & Institutional Ownership

28.6% of Donegal Group shares are held by institutional investors. Comparatively, 42.5% of Mercury General shares are held by institutional investors. 6.6% of Donegal Group shares are held by insiders. Comparatively, 35.5% of Mercury General shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and target prices for Donegal Group and Mercury General, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Donegal Group 0 0 0 0 N/A
Mercury General 0 0 0 1 4.00

Mercury General has a consensus target price of $40.00, indicating a potential upside of 35.09%. Given Mercury General’s higher possible upside, analysts clearly believe Mercury General is more favorable than Donegal Group.

Valuation & Earnings

This table compares Donegal Group and Mercury General’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Donegal Group $864.86 million 0.56 -$1.96 million ($0.32) -45.75
Mercury General $3.64 billion 0.45 -$512.67 million ($6.52) -4.54

Donegal Group has higher earnings, but lower revenue than Mercury General. Donegal Group is trading at a lower price-to-earnings ratio than Mercury General, indicating that it is currently the more affordable of the two stocks.


Donegal Group pays an annual dividend of $0.68 per share and has a dividend yield of 4.6%. Mercury General pays an annual dividend of $1.27 per share and has a dividend yield of 4.3%. Donegal Group pays out -212.5% of its earnings in the form of a dividend. Mercury General pays out -19.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Donegal Group has increased its dividend for 10 consecutive years. Donegal Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.


Donegal Group beats Mercury General on 9 of the 15 factors compared between the two stocks.

About Donegal Group

(Get Rating)

Donegal Group, Inc. is an insurance holding company, which engages in the provision of property and casualty insurance to businesses and individuals. It operates through the following segments: Investment Function, Personal Lines of Insurance, and Commercial Lines of Insurance. The Investment Function segment covers investment activities. The Personal Lines of Insurance segment consists of homeowners and private passenger automobile policies. The Commercial Lines of Insurance segment includes commercial automobile, commercial multi-peril, and workers compensation policies. The company was founded on August 26, 1986 and is headquartered in Marietta, PA.

About Mercury General

(Get Rating)

Mercury General Corp. operates as a broker and agency writer of automobile insurance. The firm engages in writing personal automobile insurance and provides related property and casualty insurance products to its customers. Its insurance products include private passenger automobile and related insurance products such as homeowners, commercial automobile and commercial property. The company was founded by George Joseph in 1961 and is headquartered in Los Angeles, CA.

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