Critical Contrast: Aflac (NYSE:AFL) vs. Donegal Group (NASDAQ:DGICA)

Donegal Group (NASDAQ:DGICA) and Aflac (NYSE:AFL) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, dividends, analyst recommendations, risk and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Donegal Group	7.38%	10.65%	2.83%
Aflac	26.91%	13.27%	3.34%

Analyst Ratings

This is a summary of recent ratings and target prices for Donegal Group and Aflac, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Donegal Group	0	2	1	0	2.33
Aflac	3	7	2	2	2.21

Donegal Group currently has a consensus price target of $20.00, indicating a potential upside of 2.83%. Aflac has a consensus price target of $116.62, indicating a potential downside of 0.41%. Given Donegal Group’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Donegal Group is more favorable than Aflac.

Institutional & Insider Ownership

28.0% of Donegal Group shares are owned by institutional investors. Comparatively, 67.4% of Aflac shares are owned by institutional investors. 2.8% of Donegal Group shares are owned by insiders. Comparatively, 0.8% of Aflac shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Donegal Group and Aflac”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Donegal Group	$963.18 million	0.75	$79.34 million	$1.93	10.08
Aflac	$18.29 billion	3.21	$3.65 billion	$9.33	12.55

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

Risk and Volatility

Donegal Group has a beta of -0.01, meaning that its share price is 101% less volatile than the S&P 500. Comparatively, Aflac has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.

Dividends

Donegal Group pays an annual dividend of $0.77 per share and has a dividend yield of 4.0%. Aflac pays an annual dividend of $2.44 per share and has a dividend yield of 2.1%. Donegal Group pays out 39.9% of its earnings in the form of a dividend. Aflac pays out 26.2% 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. Donegal Group has raised its dividend for 5 consecutive years and Aflac has raised its dividend for 44 consecutive years.

Summary

Aflac beats Donegal Group on 14 of the 18 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 Aflac

Aflac Incorporated, through its subsidiaries, provides supplemental health and life insurance products. The company operates through Aflac Japan and Aflac U.S. segments. The Aflac Japan segment offers cancer, medical, nursing care, work leave, GIFT, and whole and term life insurance products, as well as WAYS and child endowment plans under saving type insurance products in Japan. The Aflac U.S. segment provides cancer, accident, short-term disability, critical illness, hospital indemnity, dental, vision, long-term care and disability, and term and whole life insurance products in the United States. It sells its products through sales associates, brokers, independent corporate agencies, individual agencies, and affiliated corporate agencies. Aflac Incorporated was founded in 1955 and is headquartered in Columbus, Georgia.