Definity Financial Corp. (DFY) AI Stock Analysis

• Market Cap: C$8.61B
• Dividend Yield: 0.9%
• Average Volume (3M): 181.70K
• Price to Earnings (P/E): 20.4
• Beta (1Y): 0.54
• Revenue Growth: 18.15%
• EPS Growth: 18.11%
• Country: CA
• Employees: 3,442
• Sector: Financial
• Sector Strength: 82
• Industry: Insurance - Property & Casualty
• EPS (TTM): 0.65
• Shares Outstanding: 115,833,540
• 10 Day Avg. Volume: 261,374
• 30 Day Avg. Volume: 181,696
• PEG Ratio: -0.88
• Price to Book (P/B): 2.31
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 33.39
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$67.80
• Price Target Upside: -8.75% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

• Rating: 74 Outperform
• Price Target: C$86.00 ▲(15.75%Upside)

Definity Financial Corp. scores well due to its solid financial performance and strategic acquisition that boosts its market position. Technical indicators reveal a strong stock trend but also warn of potential overbought conditions. Valuation is moderate, with the P/E ratio reflecting market confidence but a low dividend yield. The absence of earnings call data does not weigh on the overall score.

Positive Factors

Earnings

The target price for Definity Financial Corp. has been increased by $1 to $64, reflecting confidence in its future performance.

Financial Performance

Sonnet is, as of Q4/24, now breaking even, consistent with guidance, and a better-than-expected dividend increase, up 17%.

Growth Potential

Definity Financial Corp. is positioned for outsized top-line growth with a scalable platform that should help drive continued improvements in underwriting profitability.

Negative Factors

CAT Losses

DFY announced Q1/25 CAT losses of $50mm, driven by heavy snowfall and rain, leading to elevated property damage, especially in Ontario, Quebec, and Atlantic Canada.

Top-Line Growth

Top-line growth was modestly weaker than estimated, impacting personal auto and distribution segments.

Underlying Loss Ratio

The underlying loss ratio was slightly higher than expected, largely due to higher weather-related claims.

Definity Financial Corp. Business Overview & Revenue Model

Company Description

Definity Financial Corporation, together with its subsidiaries, provides property and casualty insurance products in Canada. It offers personal insurance products, including auto, property, general and umbrella liability, and pet insurance products to individuals under the Economical, Sonnet, Family, Petsecure, and Peppermint brands; and commercial insurance products comprising fleet, commercial auto, property, liability, and specialty insurance products to businesses under the Economical brand name. The company distributes its products on a primarily intermediated basis, and through brokers, as well as directly to customers. Definity Financial Corporation was formerly known as Economical Holdings Corporation and changed its name to Definity Financial Corporation in August 2021. Definity Financial Corporation was founded in 1871 and is headquartered in Waterloo, Canada.

How the Company Makes Money

Definity Financial Corp. generates revenue primarily through the underwriting and sale of insurance policies. The company collects premiums from policyholders, which forms the core of its income. Investment income is another significant revenue stream, as the company invests the premiums it collects into various financial instruments to earn returns. Additionally, Definity Financial Corp. may partner with brokers and agents to expand its distribution network, thereby increasing its market reach and policy sales. Factors such as effective risk assessment, claims management, and operational efficiency contribute significantly to the company's profitability.

Definity Financial Corp. Financial Statement Overview

Summary

Definity Financial Corp. exhibits strong financial health with solid revenue growth and improving profitability. The balance sheet reflects prudent financial management with low leverage and stable equity. However, decreasing operating cash flow could signal underlying operational challenges.

Income Statement

Definity Financial Corp. has demonstrated strong revenue growth, with a consistent upward trajectory from 2019 to 2024. The net profit margin has improved significantly, indicating robust profitability. While the EBIT margin data is unavailable for 2024, the EBITDA margin remains healthy. Overall, the company shows strong financial performance with slight fluctuations in operating efficiency.

Balance Sheet

The company's debt-to-equity ratio is low, reflecting a conservative leverage strategy. Return on Equity (ROE) has been increasing steadily, demonstrating efficient use of equity to generate profits. The equity ratio remains stable, showcasing a solid financial foundation. However, a decline in cash reserves might pose a potential risk in liquidity management.

Cash Flow

Operating cash flow has decreased over the years, which may indicate challenges in converting sales into cash. Free cash flow has shown variability but remains positive, indicating adequate cash generation to support capital expenditures. The free cash flow to net income ratio suggests a reasonable alignment, though declining operating cash flow needs monitoring.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
4.53B	3.91B	3.25B	2.92B	2.70B
	Gross Profit
4.53B	3.93B	3.25B	2.92B	2.70B
	EBIT
578.70M	3.86B	304.60M	273.00M	193.10M
	EBITDA
713.60M	578.30M	165.20M	335.70M	252.40M
	Net Income Common Stockholders
430.40M	350.10M	252.00M	213.20M	153.90M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
504.90M	197.50M	2.99B	3.59B	2.91B
	Total Assets
7.69B	7.26B	8.32B	7.89B	6.62B
	Total Debt
149.50M	149.90M	70.80M	18.90M	21.70M
	Net Debt
-172.60M	66.70M	-129.70M	-368.40M	-488.60M
	Total Liabilities
4.19B	4.25B	5.84B	5.50B	4.80B
	Stockholders Equity
3.32B	2.85B	2.37B	2.40B	1.82B
Cash Flow		Free Cash Flow
231.60M	264.30M	166.10M	605.80M	447.40M
	Operating Cash Flow
307.20M	351.80M	256.90M	655.20M	490.20M
	Investing Cash Flow
-298.00M	-351.90M	-374.70M	-1.04B	-74.60M
	Financing Cash Flow
-113.80M	-61.00M	73.40M	376.80M	0.00

Definity Financial Corp. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 74.30
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:DFY, the sentiment is Positive. The current price of 74.3 is above the 20-day moving average (MA) of 70.11, above the 50-day MA of 66.97, and above the 200-day MA of 58.85, indicating a bullish trend. The MACD of 2.30 indicates Negative momentum. The RSI at 63.58 is Neutral, neither overbought nor oversold. The STOCH value of 52.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:DFY.

Definity Financial Corp. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DFY	74 Outperform	C$8.61B	20.40	13.25%	0.90%	18.15%	18.11%
Sector *	64 Neutral	$12.87B	9.81	7.76%	16985.65%	12.28%	-7.83%
FRFHF		$40.30B	9.06	17.21%	0.93%	―	―
IAG	77 Outperform	C$13.23B	15.02	12.54%	2.47%	-7.31%	28.65%
IFC	76 Outperform	C$55.63B	25.17	12.95%	1.59%	4.73%	44.14%
ELF	72 Outperform	C$5.66B	5.17	14.11%	0.92%	-25.60%	-5.43%
ONEX	72 Outperform	C$7.31B	12.26	5.40%	0.38%	-10.83%	-34.83%

Definity Financial Corp. Corporate Events

Definity Financial Expands Private Placement to Fund Acquisition

Definity Financial Corporation has announced an increase in the size of its previously declared private placements of common shares to $385 million. This move is aimed at partially funding the acquisition of the Canadian operations of Travelers, excluding its surety business, for a cash consideration of approximately $3.3 billion. The offering is expected to close around June 11, 2025, subject to regulatory approvals, and if the acquisition does not proceed, the funds will be used for general corporate purposes.

The most recent analyst rating on (TSE:DFY) stock is a Hold with a C$53.00 price target. To see the full list of analyst forecasts on Definity Financial Corp. stock, see the TSE:DFY Stock Forecast page.

Definity Financial to Acquire Travelers’ Canadian Operations for $3.3 Billion

Definity Financial Corporation has announced a significant acquisition of Travelers’ Canadian operations for $3.3 billion, excluding the Canadian surety business. This move positions Definity as the fourth-largest P&C insurer in Canada, enhancing its leadership in the broker channel and aligning with its growth strategy. The acquisition is expected to be immediately accretive to earnings per share and improve return on equity, with anticipated synergies and increased scale providing substantial value creation opportunities. The transaction, pending regulatory approval, is set to close in early 2026 and will significantly bolster Definity’s commercial lines business, adding $600 million in annual premiums and expanding its expertise in various specialty insurance areas.

The most recent analyst rating on (TSE:DFY) stock is a Hold with a C$53.00 price target. To see the full list of analyst forecasts on Definity Financial Corp. stock, see the TSE:DFY Stock Forecast page.

Definity Financial Corporation Reports Strong Shareholder Support at 2025 Annual Meeting

Definity Financial Corporation announced the results of its 2025 annual meeting of shareholders, where all proposed items, including the election of directors and the appointment of an auditor, were approved with overwhelming support. The results reflect strong shareholder confidence in the company’s leadership and strategic direction, which may positively influence its market positioning and stakeholder relations.

The most recent analyst rating on (TSE:DFY) stock is a Hold with a C$53.00 price target. To see the full list of analyst forecasts on Definity Financial Corp. stock, see the TSE:DFY Stock Forecast page.

Definity Financial Corp. Achieves Strong Q1 2025 Results Amid Market Challenges

Definity Financial Corp. reported a 9.6% growth in gross written premiums for Q1 2025, driven by strong personal auto activity and firm market conditions in personal and commercial insurance. The company maintained a combined ratio of 94.5% despite increased claims due to winter weather, thanks to proactive rate actions and disciplined expense management. Operating net income was stable at $75.9 million, with a strong book value per share increase of 16.2% year-over-year. The company strategically shifted its investment portfolio towards government bonds to protect against market volatility, enhancing its financial capacity.

Definity Financial Faces $50 Million Impact from Q1 Catastrophe Losses

Definity Financial Corporation announced that its first-quarter 2025 operating income would be negatively impacted by approximately $50 million due to catastrophe losses, which is double the historical average for this period. The losses stem from severe weather conditions, including heavy snowfall and an ice storm in Ontario, affecting property damage and power outages, highlighting the company’s enhanced catastrophe response capabilities and commitment to supporting customers.