Donegal Group, Inc.: Strong price momentum but will it sustain?

Donegal Group, Inc. relative valuation is UNDERVALUED and it has a fundamental analysis score of 36.

Our analysis is based on comparing Donegal Group, Inc. with the following peers – Travelers Companies, Inc., Federated National Holding Company, RLI Corp., State Auto Financial Corporation, Cincinnati Financial Corporation, W. R. Berkley Corporation, United Fire Group, Inc., Markel Corporation and Erie Indemnity Company Class A (TRV-US, FNHC-US, RLI-US, STFC-US, CINF-US, WRB-US, UFCS-US, MKL-US and ERIE-US).

Donegal Group, Inc. has shown overwhelming performance over the last one year at 2.48%. But over the last month performance has declined by -3.58%. In fact, Donegal Group, Inc.’s monthly share performance has also lagged its overall peer group (median share price performance was 1.43 last month).

Company Snapshot

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It trades at a lower Price/Book multiple (0.19) than its peer median (1.52).
  • We classify DGICB-US as Challenged because of its below median returns and the market’s relatively low growth expectations.
  • DGICB-US has relatively low net profit margins while its capital efficiency is relatively high.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • DGICB-US‘s return on equity currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • Relative to peers, the company’s underwriting and pre-tax margins suggest better discipline in writing policies than on controlling operating costs.
  • While DGICB-US‘s revenue growth in recent years has been above the peer median, the stock’s P/E ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
  • The company’s relatively low level of equity capital investment and below peer median returns on capital suggest that the company is in maintenance mode.
  • Our analysis rates Donegal Group, Inc. as UNDERVALUED relative to its peers.

Share Price Performance

Considering peers, relative underperformance over the last year and the last month suggest a lagging position.

DGICB-US‘s share price performance of 2.48% for the last 12 months is below its peer median. The 30-day trend in its share price performance of -3.58% is also below the peer median implying that the company’s stock performance is lagging its peers.

Share Price Performance

Quadrant label definitions. Hover to know more

Leading, Fading, Lagging, Rising

Relative Valuation

Relative Valuation
Fundamental Score

Donegal Group, Inc.’s price of USD 15.48 is lower than CapitalCube’s implied price of USD 27.34. CapitalCube believes that at these levels, Donegal Group, Inc. is undervalued and has upside potential. Over the last 52 week period, the stock has fluctuated between USD 13.55 and USD 22.88.

Valuation & Peer Metrics

A complete list of valuation metrics is available on the company page.

Company Profile

Donegal Group, Inc. is a insurance holding company, which engages in the provision of insurance and reinsurance services. It operates through the following segments: Investment Function; Personal Lines of Insurance; Commercial Lines of Insurance; and Investment in Donegal Financial Services Corporation (DFSC). The Investment Function segment cover investment activities. The Personal Lines of Insurance segment offers private vehicle and homeowners insurance. The Commercial Lines of Insurance segment provides assurance services on commercial vehicles, multi-peril, and workers’ compensation. The investment in DFSC segment comprises of investments made to DFSC. The company was founded on August 26, 1986 and is headquartered in Marietta, PA.

Disclaimer

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