Head to Head Review: Donegal Group (NASDAQ:DGICA) & Stewart Information Services (NYSE:STC)

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

Valuation and Earnings

This table compares Donegal Group and Stewart Information Services”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Donegal Group	$987.83 million	0.74	$50.86 million	$2.42	8.26
Stewart Information Services	$2.80 billion	0.73	$73.31 million	$3.59	20.31

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

Dividends

Donegal Group pays an annual dividend of $0.73 per share and has a dividend yield of 3.7%. Stewart Information Services pays an annual dividend of $2.10 per share and has a dividend yield of 2.9%. Donegal Group pays out 30.2% of its earnings in the form of a dividend. Stewart Information Services pays out 58.5% 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 Stewart Information Services has raised its dividend for 4 consecutive years. Donegal Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Donegal Group	8.33%	14.33%	3.41%
Stewart Information Services	3.65%	8.57%	4.45%

Insider & Institutional Ownership

28.0% of Donegal Group shares are held by institutional investors. Comparatively, 96.9% of Stewart Information Services shares are held by institutional investors. 6.6% of Donegal Group shares are held by company insiders. Comparatively, 1.5% of Stewart Information Services shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Donegal Group and Stewart Information Services, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Donegal Group	0	1	2	1	3.00
Stewart Information Services	0	1	2	0	2.67

Donegal Group presently has a consensus price target of $18.00, suggesting a potential downside of 9.91%. Stewart Information Services has a consensus price target of $77.50, suggesting a potential upside of 6.31%. Given Stewart Information Services’ higher possible upside, analysts clearly believe Stewart Information Services is more favorable than Donegal Group.

Volatility and Risk

Donegal Group has a beta of 0.01, suggesting that its share price is 99% less volatile than the S&P 500. Comparatively, Stewart Information Services has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500.

Summary

Donegal Group beats Stewart Information Services on 9 of the 17 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 Stewart Information Services

Stewart Information Services Corporation, through its subsidiaries, provides title insurance and real estate transaction related services in the United States and internationally. The company involves in searching, examining, closing, and insuring the condition of the title to real property. It also offers home and personal insurance services; services for tax-deferred exchanges; and digital customer engagement platform services. It also provides appraisal management, online notarization and closing, credit and real estate information, and search and valuation services. The company serves homebuyers and sellers, residential and commercial real estate professionals, mortgage lenders and servicers, title agencies and real estate attorneys, and home builders through direct operations, network of independent agencies, and other businesses. The company was founded in 1893 and is headquartered in Houston, Texas.