Donegal Group (NASDAQ:DGICA) versus Fidelis Insurance (NYSE:FIHL) Critical Analysis

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

Analyst Recommendations

This is a summary of current recommendations for Donegal Group and Fidelis Insurance, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Donegal Group	0	0	0	0	0.00
Fidelis Insurance	1	2	3	0	2.33

Fidelis Insurance has a consensus price target of $20.57, indicating a potential upside of 40.85%. Given Fidelis Insurance’s stronger consensus rating and higher possible upside, analysts clearly believe Fidelis Insurance is more favorable than Donegal Group.

Volatility & Risk

Donegal Group has a beta of -0.04, meaning that its stock price is 104% less volatile than the S&P 500. Comparatively, Fidelis Insurance has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.

Earnings and Valuation

This table compares Donegal Group and Fidelis Insurance”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Donegal Group	$989.61 million	0.60	$4.43 million	$1.52	11.56
Fidelis Insurance	$2.42 billion	0.71	$2.13 billion	$0.94	15.54

Fidelis Insurance has higher revenue and earnings than Donegal Group. Donegal Group is trading at a lower price-to-earnings ratio than Fidelis Insurance, indicating that it is currently the more affordable of the two stocks.

Dividends

Donegal Group pays an annual dividend of $0.69 per share and has a dividend yield of 3.9%. Fidelis Insurance pays an annual dividend of $0.40 per share and has a dividend yield of 2.7%. Donegal Group pays out 45.4% of its earnings in the form of a dividend. Fidelis Insurance pays out 42.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares Donegal Group and Fidelis Insurance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Donegal Group	5.14%	9.50%	2.02%
Fidelis Insurance	20.17%	15.27%	3.36%

Insider and Institutional Ownership

28.0% of Donegal Group shares are owned by institutional investors. Comparatively, 82.0% of Fidelis Insurance shares are owned by institutional investors. 6.6% of Donegal Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Fidelis Insurance beats Donegal Group on 12 of the 16 factors compared between the two stocks.

About Donegal Group

Donegal Group Inc., an insurance holding company, provides 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 independent insurance agencies. Donegal Group Inc. was incorporated in 1986 and is based in Marietta, Pennsylvania. Donegal Group Inc. operates as a subsidiary of Donegal Mutual Insurance Company.

About Fidelis Insurance

Fidelis Insurance Holdings Limited, a specialty insurer, provides insurance and reinsurance solutions in Bermuda, the Republic of Ireland, and the United Kingdom. It operates in three segments: Specialty, Reinsurance, and Bespoke segments. The Specialty segment offers aviation and aerospace, energy, marine, property direct and facultative, and other specialty risk solutions. The Reinsurance segment provides property, retrocession, and whole account reinsurance solutions. The Bespoke segment offers customized risk solutions for clients that include credit and political risk, as well as other risk transfer opportunities, including political violence and terrorism, limited cyber reinsurance, tax liabilities, title, transactional liabilities, and other bespoke solutions. Fidelis Insurance Holdings Limited was incorporated in 2014 and is headquartered in Pembroke, Bermuda.