Head-To-Head Contrast: Universal Insurance (NYSE:UVE) vs. Donegal Group (NASDAQ:DGICB)

Donegal Group (NASDAQ:DGICB) and Universal Insurance (NYSE:UVE) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, risk, dividends and earnings.

Insider and Institutional Ownership

1.2% of Donegal Group shares are held by institutional investors. Comparatively, 66.6% of Universal Insurance shares are held by institutional investors. 8.6% of Donegal Group shares are held by insiders. Comparatively, 15.0% of Universal Insurance shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Donegal Group pays an annual dividend of $0.70 per share and has a dividend yield of 2.7%. Universal Insurance pays an annual dividend of $0.64 per share and has a dividend yield of 1.4%. Donegal Group pays out 40.7% of its earnings in the form of a dividend. Universal Insurance pays out 8.0% 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 5 consecutive years. Donegal Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings for Donegal Group and Universal Insurance, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Donegal Group	0	1	0	0	2.00
Universal Insurance	0	1	0	2	3.33

Universal Insurance has a consensus price target of $51.00, suggesting a potential upside of 9.66%. Given Universal Insurance’s stronger consensus rating and higher possible upside, analysts plainly believe Universal Insurance is more favorable than Donegal Group.

Earnings and Valuation

This table compares Donegal Group and Universal Insurance”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Donegal Group	$978.01 million	0.98	$79.34 million	$1.72	14.97
Universal Insurance	$1.60 billion	0.80	$182.95 million	$8.00	5.81

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

Volatility & Risk

Donegal Group has a beta of -0.1, suggesting that its stock price is 110% less volatile than the S&P 500. Comparatively, Universal Insurance has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Donegal Group	7.24%	10.49%	2.80%
Universal Insurance	13.94%	38.15%	7.63%

Summary

Universal Insurance beats Donegal Group on 13 of the 17 factors compared between the two stocks.

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.

About Universal Insurance

Universal Insurance Holdings, Inc., together with its subsidiaries, operates as an integrated insurance holding company in the United States. It develops, markets, and underwrites insurance products for personal residential insurance, such as homeowners, renters/tenants, condo unit owners, and dwelling/fire; and offers allied lines, coverage for other structures, and personal property, liability, and personal articles coverages. The company also advises on actuarial issues, oversees distribution, administers claims payments, performs policy administration and underwriting, and assists with reinsurance negotiations; places and manages reinsurance programs for the insurance entities; and operates Clovered.com, a digital agency for various carrier partners and utilization of digital applications for adjusting claims. It offers its products through a network of independent agents, as well as direct-to-consumer online solutions, including digital insurance agency. The company was formerly known as Universal Heights, Inc. and changed its name to Universal Insurance Holdings, Inc. in January 2001. Universal Insurance Holdings, Inc. was incorporated in 1990 and is headquartered in Fort Lauderdale, Florida.