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Donegal Group (DGICA)
NASDAQ:DGICA
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Donegal Group
(NASDAQ:DGICA)
73Outperform
Donegal Group (DGICA) vs. S&P 500 (SPY)
Market Cap
$655.71M
Dividend Yield3.7%
Average Volume (3M)124.95K
Price to Earnings (P/E)12.2
Beta (1Y)0.07
Revenue Growth6.71%
EPS Growth1000.07%
CountryUS
Employees410
SectorFinancial
Sector Strength80
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)1.51
Shares Outstanding30,062,060
10 Day Avg. Volume99,558
30 Day Avg. Volume124,948
Financial Highlights & Ratios
PEG Ratio0.01
Price to Book (P/B)N/A
Price to Sales (P/S)0.66
Price to Cash Flow (P/CF)5.80
P/FCF Ratio5.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$16.00Price Target Upside-14.26% Downside
Rating ConsensusHold
Number of Analyst Covering1
Donegal Group Business Overview & Revenue Model
Company DescriptionDonegal Group Inc., an insurance holding company, provides personal and commercial lines of property and casualty insurance to businesses and individuals. It operates through three 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; and homeowners policies, which provide coverage for damage to residences and their contents from a range of perils, including fire, lightning, windstorm, and theft, as well as liability of the insured arising from injury to other persons or their property. It also 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 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 primarily to Mid-Atlantic, Midwestern, New England, Southern, and Southwestern regions through approximately 2,300 independent insurance agencies. Donegal Group Inc. was incorporated in 1986 and is headquartered in Marietta, Pennsylvania.
How the Company Makes MoneyDonegal Group makes money through the underwriting and sale of insurance policies. The company collects premiums from policyholders in exchange for coverage against various risks. Its key revenue streams include personal lines, such as auto and homeowners insurance, and commercial lines that cover business-related risks. Donegal Group also invests the premiums collected in a diversified portfolio, generating investment income. The company's financial performance is influenced by factors such as underwriting profitability, claims experience, and investment returns. Strategic partnerships with independent agents and agencies further expand its market reach and contribute to revenue growth.
Donegal Group Financial Statement Overview
Summary
Donegal Group demonstrates financial resilience with steady revenue growth and a strong equity base. However, profitability is hampered by volatile net income margins and erratic cash flow growth.Income Statement
The income statement shows a mixed performance with steady revenue growth over the years, albeit from a low base. The gross profit margin is consistently high due to the nature of the insurance industry. However, the net profit margin is quite low and volatile, with periods of negative net income, reflecting profitability challenges.65
Positive
Balance Sheet
The balance sheet indicates a strong equity base with a manageable debt-to-equity ratio, suggesting financial stability. The company maintains a healthy equity ratio, indicating a solid financial foundation. However, the return on equity is inconsistent due to fluctuating net income.70
Positive
Cash Flow
Cash flow analysis reveals a positive operating cash flow, which is a good sign of operational efficiency. However, the free cash flow growth rate is inconsistent, and the cash flow ratios indicate potential challenges in converting earnings into cash.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 989.61B | 927.34M | 454.00 | 816.47M | 777.82M | Gross Profit |
| 989.61B | 927.34M | 454.00 | 816.47M | 777.82M | EBIT |
| 0.00 | 0.00 | ― | 29.91M | 62.84M | EBITDA |
| 0.00 | 10.01M | 1.82M | 37.07M | 71.19M | Net Income Common Stockholders |
| 50.86M | 4.43M | -1.96M | 25.25M | 52.82M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 52.93B | 23.79M | 606.24M | 603.03M | 679.13M | Total Assets |
| 2.34T | 2.27B | 2.24B | 2.26B | 2.16B | Total Debt |
| 35.00B | 35.00M | 35.00M | 35.00M | 90.00M | Net Debt |
| -17.93B | 11.21M | 9.88M | -22.71M | -13.09M | Total Liabilities |
| 1.79T | 1.79B | 1.76B | 38.95M | 1.64B | Stockholders Equity |
| 545.78B | 479.75M | 483.59M | 531.04M | 517.77M |
| Cash Flow | Free Cash Flow | |||
| 67.44B | 28.58M | 95.40M | 1.30B | 101.04M | Operating Cash Flow |
| 67.44B | 28.62M | 67.11M | 76.73M | 101.13M | Investing Cash Flow |
| -48.04B | -16.71M | -98.50M | -62.20M | -99.68M | Financing Cash Flow |
| 9.73B | -13.25M | -1.20M | -59.92M | 52.32M |
Donegal Group Technical Analysis
Positive
18.66
Price Trends
16.93
Positive
16.20
Positive
15.12
Positive
Market Momentum
0.76
Negative
81.15
Negative
93.09
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DGICA, the sentiment is Positive. The current price of 18.66 is above the 20-day moving average (MA) of 18.63, above the 50-day MA of 16.93, and above the 200-day MA of 15.12, indicating a bullish trend. The MACD of 0.76 indicates Negative momentum. The RSI at 81.15 is Negative, neither overbought nor oversold. The STOCH value of 93.09 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DGICA.
Donegal Group Risk Analysis
Donegal Group disclosed 1 risk factors in its most recent earnings report. Donegal Group reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Donegal Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $5.68B | 13.47 | 16.03% | 2.22% | 4.07% | 1110.92% | |
78 Outperform | $683.78M | 11.27 | 8.18% | 2.38% | 14.41% | ― | |
75 Outperform | $5.25B | 26.74 | 6.82% | 1.69% | 15.35% | -44.64% | |
73 Outperform | $2.78B | 5.95 | 26.78% | 2.53% | 18.27% | 385.75% | |
73 Outperform | $655.71M | 12.20 | 9.92% | 3.70% | 6.71% | 1000.07% | |
63 Neutral | $12.86B | 9.19 | 9.16% | 4.78% | 16.31% | -8.97% | |
59 Neutral | $3.70B | 11.77 | 12.01% | 2.16% | -6.08% | ― |
* Financial Sector Average
Performance Comparison
DGICA
Donegal Group
18.66
5.56
42.44%
MCY
Mercury General
50.26
-0.09
-0.18%
SIGI
Selective Insurance Group
86.33
-17.29
-16.69%
THG
Hanover Insurance
157.64
27.65
21.27%
UFCS
United Fire Group
26.94
5.62
26.36%
KMPR
Kemper
57.74
1.28
2.27%
Donegal Group Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: 23.01% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant improvements in net income, combined ratios, and investment income, indicating strong operational performance. However, challenges such as strategic exits from certain geographies and unfavorable development in commercial auto were noted. Overall, the positive aspects outweighed the negatives.Highlights
Record Quarterly Net Income
Fourth quarter 2024 net income of $24 million, the highest quarterly earnings in Donegal Group's history.
Combined Ratio Improvement
Fourth quarter 2024 combined ratio was 92.9%, improved from 106.8% in the prior-year quarter, driven by a decrease in core loss ratios.
Personal Lines Core Loss Ratio Improvement
Achieved a 16.7 percentage-point decrease in the personal lines core loss ratio for the fourth quarter of 2024.
Commercial Lines Core Loss Ratio Improvement
Achieved a 4.4 percentage-point decrease in the commercial lines core loss ratio for the fourth quarter of 2024.
Successful Rate Increases
Rate increases in double-digit percentages for all major lines of business except workers’ compensation, averaging 11% for the fourth quarter.
Investment Income Growth
Net investment income grew 12.5% in the fourth quarter, resulting in $12.1 million and a full year 10% growth to $44.9 million.
Expense Ratio Decrease
Fourth quarter 2024 expense ratio decreased to 32.8% from 34.1% in the prior-year quarter, contributing to a full year expense ratio of 33.7% for 2024.
Lowlights
Gaming Revenue Decline
Net premiums written decreased by 0.6% in the fourth quarter, with a 5% decrease in personal lines premiums.
Geographical Exits
Completed exit from commercial lines business in Georgia and Alabama, with plans to non-renew all policies in Maine and New Hampshire.
Unfavorable Development in Commercial Auto
Unfavorable reserve development of $5.1 million for commercial auto due to higher-than-expected severity for bodily injury losses.
Personal Lines Policy Decrease
Number of personal lines policies-in-force decreased by 11.6% at the end of 2024 compared to the prior year-end, primarily due to strategic actions.
Company Guidance
During the Donegal Group's fourth quarter and full year 2024 earnings call, the company reported a net income of $24 million, marking its highest quarterly earnings. Net premiums earned grew by 4.6% to $236.6 million in the fourth quarter, while net premiums written decreased by 0.6%. The combined ratio improved significantly to 92.9%, down from 106.8% in the prior-year quarter, driven by a 9.5 percentage-point decrease in the core loss ratio. Weather-related losses were notably lower, contributing 3.3 percentage points to the loss ratio. The full-year loss ratio decreased to 64.5% from 69.1% in 2023, with a combined ratio of 98.6% compared to 104.4% in the prior year. The company achieved a 12.5% increase in net investment income for the fourth quarter and 10% for the full year, totaling $44.9 million. The expense ratio also saw improvement, decreasing to 32.8% in the fourth quarter and 33.7% for the full year. Donegal Group's strategic efforts in underwriting discipline and system modernization, along with rate increases, have set the stage for sustained financial performance and targeted growth in commercial lines for 2025.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.