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Donegal Group (DGICA)
NASDAQ:DGICA
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Donegal Group
(NASDAQ:DGICA)
Rating:74Outperform
Price Target:―
Donegal Group (DGICA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$715.69M
Dividend Yield3.51%
Average Volume (3M)131.71K
Price to Earnings (P/E)10.0
Beta (1Y)0.15
Revenue Growth5.29%
EPS Growth1200.44%
CountryUS
Employees410
SectorFinancial
Sector Strength83
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)0.72
Shares Outstanding30,519,896
10 Day Avg. Volume96,416
30 Day Avg. Volume131,709
Financial Highlights & Ratios
PEG Ratio0.33
Price to Book (P/B)1.19
Price to Sales (P/S)0.00
P/FCF Ratio10.31
Enterprise Value/Market Cap0.97
Enterprise Value/Revenue0.18
Enterprise Value/Gross Profit0.70
Enterprise Value/Ebitda5.50
Forecast
1Y Price Target
$18.00Price Target Upside-7.60% Downside
Rating ConsensusHold
Number of Analyst Covering1
Donegal Group Business Overview & Revenue Model
Company DescriptionDonegal Group Inc. (DGICA) is a regional insurance holding company based in the United States. It operates primarily in the property and casualty insurance sectors, providing personal and commercial insurance products. The company's offerings include auto, homeowners, and business insurance, catering to individuals and small to mid-sized businesses. Donegal Group's operations are focused on delivering comprehensive insurance solutions with a strong emphasis on customer service and regional market expertise.
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 Earnings Call Summary
Earnings Call Date:Apr 24, 2025
(Q1-2025)
| % Change Since: 5.01%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Positive
The earnings call demonstrated strong financial performance with record earnings, significant improvements in combined and personal lines ratios, and positive advancements in technology and investments. However, challenges such as a decrease in net premiums written and specific difficulties in workers' compensation were noted. Overall, the highlights significantly outweigh the lowlights, indicating a positive outlook.Q1-2025 Updates
Positive Updates
Record Earnings
Donegal Group reported the highest quarterly earnings in its history for the first quarter of 2025, surpassing the previous record set in the fourth quarter.
Improved Combined Ratio
The combined ratio improved significantly to 91.6% in the first quarter of 2025 from 102.4% in the prior year quarter.
Significant Underwriting Profit
The underwriting income, combined with $12 million of net investment income, resulted in after-tax net income of $25.2 million, a significant increase from $6 million in the first quarter of 2024.
Personal Lines Improvement
The personal lines combined ratio improved by 16.7 percentage points to 83.6%, mainly due to a 50% reduction in large fire losses and a decrease in weather claims frequency.
Technology Advancements
Deployment of a new commercial package policy and modernization of other middle market commercial products is on track for July 2025.
Investment Performance
Net investment income increased by 9.2% to $12 million for the first quarter of 2025, with a 3.50% average tax equivalent yield.
Negative Updates
Decrease in Net Premiums Written
Net premiums written decreased by 1.7% overall, with a 9.9% decrease in personal lines net premiums written offset partially by a 3.3% growth in commercial lines.
Challenges in Workers' Compensation
An anomalous increase in claim severity was observed in workers' compensation, driven by a small number of severe injury claims.
Personal Lines Premium Decline
Personal lines net premiums written decreased by 9.9%, driven by strategies to accelerate profitability, including lowering new business volume and non-renewal of a legacy Maryland book of business.
Company Guidance
During the first quarter of 2025, Donegal Group reported a substantial improvement in financial performance with net premiums earned increasing by 2.2% to $232.7 million, despite a 1.7% decrease in net premiums written. The combined ratio improved significantly to 91.6% from 102.4% in the prior year, driven by a 4.5 percentage point decrease in the core loss ratio. Weather-related losses were reduced to $8.6 million, contributing 3.7 percentage points to the loss ratio, down from $10.8 million in the previous year. Large fire losses also decreased, contributing 3.3 percentage points compared to 6.6 percentage points in 2024. Net favorable development of reserves resulted in a 4.5 percentage point reduction in the loss ratio. The expense ratio decreased modestly to 34.6%, reflecting ongoing expense reduction initiatives. Overall, the underwriting income combined with $12 million in net investment income resulted in an after-tax net income of $25.2 million, a significant increase from $6 million in the first quarter of 2024.Donegal Group Financial Statement Overview
Summary
Donegal Group exhibits financial resilience with a strong equity position and consistent revenue growth. However, profitability remains a concern due to volatile net income margins. Cash flow generation is positive, but growth is erratic, requiring attention to cash conversion efficiency.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 | |||
| 989.61M | 927.34M | 454.00 | 816.47M | 777.82M | Gross Profit |
| 989.61M | 927.34M | 454.00 | 816.47M | 777.82M | EBIT |
| 62.34M | 0.00 | ― | 29.91M | 62.84M | EBITDA |
| 67.16M | 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 |
| 1.76B | 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 |
| 1.21B | 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 | |||
| 67.44M | 28.58M | 95.40M | 1.30B | 101.04M | Operating Cash Flow |
| 67.44M | 28.62M | 67.11M | 76.73M | 101.13M | Investing Cash Flow |
| -48.04M | -16.71M | -98.50M | -62.20M | -99.68M | Financing Cash Flow |
| 9.73M | -13.25M | -1.20M | -59.92M | 52.32M |
Donegal Group Technical Analysis
Positive
19.48
Price Trends
19.35
Positive
17.66
Positive
16.36
Positive
Market Momentum
0.26
Positive
51.50
Neutral
43.71
Neutral
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 19.48 is below the 20-day moving average (MA) of 20.11, above the 50-day MA of 19.35, and above the 200-day MA of 16.36, indicating a neutral trend. The MACD of 0.26 indicates Positive momentum. The RSI at 51.50 is Neutral, neither overbought nor oversold. The STOCH value of 43.71 is Neutral, 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 1 New Risks
1.
Q4, 2024
Donegal Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $724.84M | 11.22 | 8.51% | 2.25% | 14.60% | ― | |
78 Outperform | $780.73M | 12.14 | 16.95% | 2.31% | 7.24% | -9.28% | |
76 Outperform | $789.40M | 9.72 | 27.59% | ― | 11.41% | 53.85% | |
74 Outperform | $715.69M | 9.97 | 13.11% | 3.51% | 5.29% | 1200.44% | |
65 Neutral | $444.51M | 15.59 | 4.14% | 4.50% | -10.61% | -19.48% | |
64 Neutral | $12.80B | 9.71 | 7.59% | 16985.66% | 12.07% | -7.53% | |
56 Neutral | $545.43M | 7.89 | 31.11% | ― | 12.19% | 5.12% |
* Financial Sector Average
Performance Comparison
DGICA
Donegal Group
19.48
6.81
53.75%
GBLI
Global Indemnity
31.22
1.85
6.30%
UFCS
United Fire Group
28.09
7.25
34.79%
UVE
Universal Insurance Holdings
27.56
9.18
49.95%
ACIC
American Coastal Insurance
11.75
0.83
7.60%
HRTG
Heritage Insurance Holdings
24.05
16.01
199.13%
Donegal Group Corporate Events
DividendsBusiness Operations and Strategy
Donegal Group Increases Quarterly Cash Dividends
Positive
Apr 17, 2025
On April 17, 2025, Donegal Group Inc. announced an increase in its quarterly cash dividends, with Class A common stock dividends rising by 5.8% and Class B by 6.5%. This move reflects the company’s strategic focus on financial performance and stakeholder value, with dividends payable on May 15, 2025, to stockholders recorded by May 1, 2025.
Spark’s Take on DGICA Stock
According to Spark, TipRanks’ AI Analyst, DGICA is a Outperform.
Donegal Group’s stock is bolstered by strong operational performance and positive earnings call sentiment. Technical indicators show upward momentum, and valuation metrics suggest the stock is reasonably priced. However, profitability challenges and strategic exits pose risks.
To see Spark’s full report on DGICA stock, click here.
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.