Donegal Group (NASDAQ:DGICA) and Universal Insurance (UVE) Financial Survey

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

Valuation & Earnings

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 $739.03 million 0.53 $7.11 million $0.30 46.07
Universal Insurance $751.92 million 2.09 $106.93 million N/A N/A

Universal Insurance has higher revenue and earnings than Donegal Group.

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 -2.65% -4.16% -1.01%
Universal Insurance 19.77% 33.17% 10.34%

Volatility and Risk

Donegal Group has a beta of 0.39, indicating that its stock price is 61% less volatile than the S&P 500. Comparatively, Universal Insurance has a beta of 1.88, indicating that its stock price is 88% more volatile than the S&P 500.

Insider & Institutional Ownership

31.3% of Donegal Group shares are owned by institutional investors. Comparatively, 73.9% of Universal Insurance shares are owned by institutional investors. 13.1% of Donegal Group shares are owned by insiders. Comparatively, 10.6% of Universal Insurance shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Donegal Group pays an annual dividend of $0.57 per share and has a dividend yield of 4.1%. Universal Insurance pays an annual dividend of $0.64 per share and has a dividend yield of 1.4%. Donegal Group pays out 190.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Donegal Group has raised its dividend for 2 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 reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Donegal Group 0 1 1 0 2.50
Universal Insurance 0 1 0 0 2.00

Donegal Group presently has a consensus price target of $18.00, indicating a potential upside of 30.25%. Universal Insurance has a consensus price target of $44.00, indicating a potential downside of 2.14%. Given Donegal Group’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Donegal Group is more favorable than Universal Insurance.

Summary

Universal Insurance beats Donegal Group on 9 of the 16 factors compared between the two stocks.

Donegal Group Company Profile

Donegal Group Inc., an insurance holding company, provides 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, Commercial Lines of Insurance, and Investment in DFSC. 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. Donegal Group Inc., through its interest in Donegal Financial Services Corporation, operates a savings bank. 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. Donegal Group Inc. is a subsidiary of Donegal Mutual Insurance Company.

Universal Insurance Company Profile

Universal Insurance Holdings, Inc., together with its subsidiaries, operates as an integrated insurance holding company in the United States. The company primarily offers personal residential homeowner's insurance. It also underwrites homeowner's multi-peril insurance; and fire, commercial multi-peril, and other liability lines of business. In addition, the company offers policy and claims administration, and reinsurance intermediary services, as well as operates Universal Direct, a direct-to-consumer online platform, which enables homeowners to directly purchase, pay for, and bind homeowners' policies. It provides its products through a network of independent agents. 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 founded in 1990 and is based in Fort Lauderdale, Florida.

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