Definity Financial Corp. (DFY) AI Stock Analysis

• Market Cap: C$8.98B
• Dividend Yield: 1.02%
• Average Volume (3M): 203.62K
• Price to Earnings (P/E): 18.1
• Beta (1Y): 0.52
• Revenue Growth: 19.80%
• EPS Growth: -12.93%
• Country: CA
• Employees: 3,442
• Sector: Financial
• Sector Strength: 70
• Industry: Insurance - Property & Casualty
• EPS (TTM): 1.03
• Shares Outstanding: 121,600,000
• 10 Day Avg. Volume: 244,361
• 30 Day Avg. Volume: 203,623
• PEG Ratio: 0.67
• Price to Book (P/B): 2.02
• Price to Sales (P/S): 1.49
• P/FCF Ratio: 28.97
• 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$80.33
• Price Target Upside: 8.82% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 79 Outperform
• Price Target: C$80.00 ▲(8.37% Upside)

Definity Financial Corp. scores well due to strong financial performance and positive earnings call sentiment. Technical indicators support a bullish outlook, though valuation is fair. The company's strategic initiatives and robust financial results position it well in the industry.

Positive Factors

Strong Underwriting Performance

Strong underwriting performance indicates effective risk management and pricing strategies, supporting long-term profitability and stability.

Book Value Growth

Significant growth in book value reflects strong financial health and enhances shareholder equity, providing a solid foundation for future growth.

Cash Flow Health

Healthy cash flow supports operational and strategic flexibility, enabling the company to invest in growth opportunities and manage liabilities.

Negative Factors

Challenges in Personal Auto Growth

Challenges in personal auto growth due to rate increases may limit market share expansion, impacting revenue growth in this segment.

Competitive Pressure in Commercial Segment

Increased competition in the commercial segment could pressure margins and limit growth opportunities, affecting long-term profitability.

Earnings Decline

A decline in earnings per share suggests potential challenges in maintaining profitability, which could impact investor confidence and future growth.

Definity Financial Corp. Business Overview & Revenue Model

Company Description

Definity Financial Corp. (DFY) is a Canadian insurance and financial services company that operates primarily in the property and casualty insurance sector. The company focuses on providing a range of insurance products including personal and commercial auto insurance, home insurance, and various business-related insurance solutions. With an emphasis on technology and innovation, Definity aims to enhance customer experience and streamline its service delivery across its offerings.

How the Company Makes Money

Definity Financial Corp. generates revenue primarily through the underwriting of insurance policies. The company collects premiums from policyholders, which constitutes a significant portion of its income. Additionally, Definity invests the premiums it receives in various financial instruments, generating investment income. The company also benefits from economies of scale and operational efficiencies as it expands its customer base and product offerings. Key revenue streams include direct insurance premiums, reinsurance agreements, and investment returns. Strategic partnerships with technology firms enhance its capabilities to offer competitive products, thereby contributing to its financial performance.

Definity Financial Corp. Financial Statement Overview

Summary

Definity Financial Corp. demonstrates solid financial health with strong profitability, efficient operations, and a robust balance sheet. The company has managed to grow its revenue and maintain healthy margins, although the pace of revenue growth has slowed. The balance sheet is well-managed with low leverage, and cash flow generation is strong, though there is room for improvement in converting net income to free cash flow.

Income Statement

Definity Financial Corp. shows strong revenue growth with a TTM (Trailing-Twelve-Months) revenue growth rate of 3.6% and consistent profitability. The gross profit margin is robust at 42.2%, and the net profit margin has improved to 10.7% in the TTM. The EBIT and EBITDA margins are healthy, indicating efficient operations. However, the revenue growth rate has slowed compared to previous years, which could be a concern if the trend continues.

Balance Sheet

The company maintains a solid balance sheet with a low debt-to-equity ratio of 0.039, reflecting conservative leverage. Return on equity is strong at 11.5%, demonstrating effective use of shareholder funds. The equity ratio is stable, indicating a strong capital base. However, the slight increase in debt over the years should be monitored.

Cash Flow

Cash flow performance is commendable with a 10.3% growth in free cash flow in the TTM. The operating cash flow to net income ratio is strong, although the free cash flow to net income ratio is slightly below 1, suggesting room for improvement in cash generation relative to net income. The company has shown resilience in maintaining positive cash flow growth, despite fluctuations in previous years.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.83B	4.51B	4.03B	2.99B	0.00	2.70B
Gross Profit	981.70M	867.90M	689.40M	175.90M	0.00	754.40M
EBITDA	794.40M	713.60M	578.30M	187.40M	0.00	200.60M
Net Income	476.80M	430.40M	350.10M	110.90M	0.00	153.90M
Balance Sheet
Total Assets	9.56B	7.69B	7.26B	8.32B	7.89B	6.62B
Cash, Cash Equivalents and Short-Term Investments	561.80M	504.90M	197.50M	2.99B	3.59B	2.91B
Total Debt	1.15B	149.50M	149.90M	70.80M	18.90M	21.70M
Total Liabilities	5.31B	4.19B	4.25B	5.84B	5.50B	4.80B
Stockholders Equity	4.01B	3.32B	2.85B	2.37B	2.40B	1.82B
Cash Flow
Free Cash Flow	384.80M	231.60M	264.30M	166.10M	605.80M	447.40M
Operating Cash Flow	479.30M	307.20M	351.80M	256.90M	655.20M	490.20M
Investing Cash Flow	-1.87B	-298.00M	-351.90M	-374.70M	-1.04B	-74.60M
Financing Cash Flow	1.30B	-113.80M	-61.00M	73.40M	376.80M	0.00

Definity Financial Corp. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 73.82
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 73.82 is above the 20-day moving average (MA) of 71.33, above the 50-day MA of 68.92, and above the 200-day MA of 69.59, indicating a bullish trend. The MACD of 0.95 indicates Negative momentum. The RSI at 68.93 is Neutral, neither overbought nor oversold. The STOCH value of 90.07 is Negative, 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	79 Outperform	C$8.98B	18.06	13.44%	1.02%	19.80%	-12.93%
FFH	79 Outperform	C$57.61B	8.11	18.65%	0.88%	10.08%	24.18%
ELF	73 Outperform	C$5.75B	4.42	15.37%	903.46%	-31.32%	-26.23%
IFC	73 Outperform	C$50.39B	16.90	16.27%	1.85%	2.51%	44.44%
IAG	71 Outperform	C$16.08B	14.93	14.34%	2.16%	-25.13%	16.40%
ONEX	69 Neutral	C$7.70B	12.86	5.15%	0.36%	2.46%	-27.48%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%

Definity Financial Corp. Corporate Events

Definity Financial Corp. Reports Strong Q3 2025 Results and Secures Financing for Major Acquisition

Definity Financial Corp. reported a robust third quarter for 2025, with a 7.5% growth in gross written premiums and a record operating net income of $125.2 million. The company’s financial position is strong, with shareholders’ equity surpassing $4 billion for the first time, and it has successfully secured financing for its acquisition of Travelers’ Canadian operations, which is expected to close in early 2026. The results reflect improved operational efficiency, lower-than-expected catastrophe losses, and strong investment and distribution income, positioning Definity well for future growth.

Definity Financial Announces $1 Billion Private Placement to Fund Acquisition

Definity Financial Corporation announced a $1 billion private placement of senior unsecured notes in two series to accredited investors in Canada. The proceeds from this placement are intended to fund part of the acquisition of the Canadian operations of The Travelers Companies, Inc. This strategic move is expected to strengthen Definity’s market position in the Canadian insurance industry. The private placement is co-led by RBC Capital Markets and TD Securities and is subject to customary conditions, with an expected closing date of September 12, 2025.