Donegal Group (DGICA) vs. Kingsway Financial Services (KFS) Financial Analysis

Donegal Group (NASDAQ:DGICA) and Kingsway Financial Services (NYSE:KFS) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, risk, valuation and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Donegal Group and Kingsway Financial Services, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Donegal Group 0 1 1 0 2.50
Kingsway Financial Services 0 0 0 0 N/A

Donegal Group presently has a consensus target price of $18.00, indicating a potential upside of 41.51%. Given Donegal Group’s higher probable upside, research analysts clearly believe Donegal Group is more favorable than Kingsway Financial Services.

Earnings and Valuation

This table compares Donegal Group and Kingsway Financial Services’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Donegal Group $771.83 million 0.47 -$32.76 million ($1.00) -12.72
Kingsway Financial Services $52.64 million 1.08 -$26.68 million N/A N/A

Kingsway Financial Services has lower revenue, but higher earnings than Donegal Group.

Insider & Institutional Ownership

30.6% of Donegal Group shares are held by institutional investors. Comparatively, 25.0% of Kingsway Financial Services shares are held by institutional investors. 9.8% of Donegal Group shares are held by insiders. Comparatively, 49.0% of Kingsway Financial Services shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Donegal Group pays an annual dividend of $0.57 per share and has a dividend yield of 4.5%. Kingsway Financial Services does not pay a dividend. Donegal Group pays out -57.0% of its earnings in the form of a dividend. Donegal Group has raised its dividend for 3 consecutive years.

Risk & Volatility

Donegal Group has a beta of 0.36, meaning that its stock price is 64% less volatile than the S&P 500. Comparatively, Kingsway Financial Services has a beta of -0.01, meaning that its stock price is 101% less volatile than the S&P 500.

Profitability

This table compares Donegal Group and Kingsway Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Donegal Group -4.24% -6.55% -1.50%
Kingsway Financial Services -30.73% -57.59% -4.04%

Summary

Donegal Group beats Kingsway Financial Services on 11 of the 14 factors compared between the two stocks.

About Donegal Group

Donegal Group Inc., an insurance holding company, provides personal and commercial lines of property and casualty insurance to businesses and individuals in the Mid-Atlantic, Midwestern, New England, and southern states. It operates through four segments: Investment Function, Personal Lines of Insurance, Commercial Lines of Insurance, and Investment in DFSC. 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. It also offers homeowners policies, which provide coverage for damage to residences and their contents from a range of perils, including fire, lightning, windstorm, and theft; and liability of the insured arising from injury to other persons or their property. In addition, the company 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 various perils, primarily 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 through a network of approximately 2,400 independent insurance agencies. Donegal Group Inc. was founded in 1986 and is headquartered in Marietta, Pennsylvania. Donegal Group Inc. is a subsidiary of Donegal Mutual Insurance Company.

About Kingsway Financial Services

Kingsway Financial Services Inc., through its subsidiaries, provides property and casualty insurance products in the United States. The company operates through three segments: Insurance Underwriting, Extended Warranty, and Leased Real Estate. The Insurance Underwriting segment offers various automobile insurance products, including liability insurance that covers claims against its insured's responsible for automobile accidents; accident benefit policies or personal injury protection policies that provide coverage for loss of income, medical, and rehabilitation expenses for insured persons who are injured in an automobile accident; and physical damage policies, which cover damages to an insured automobile arising from a collision with another object, as well as from other risks, such as fire or theft. The Extended Warranty segment markets and administers vehicle service agreements and related products for new and used automobiles. This segment also markets and distributes warranty products to manufacturers, distributors, and installers of heating, ventilation and air conditioning, standby generator, commercial LED lighting, and refrigeration equipment; and equipment breakdown and maintenance support services to companies. The Leased Real Estate segment owns the Real Property, which is subject to a long-term triple net lease agreement. The company offers its products and services to credit unions, consumers, and businesses through a network of independent agencies. Kingsway Financial Services Inc. was founded in 1989 and is based in Itasca, Illinois.

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