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

Volatility & Risk

Axis Capital has a beta of 0.42, indicating that its share price is 58% less volatile than the S&P 500. Comparatively, Donegal Group has a beta of 0.47, indicating that its share price is 53% less volatile than the S&P 500.

Dividends

Axis Capital pays an annual dividend of $1.56 per share and has a dividend yield of 2.7%. Donegal Group pays an annual dividend of $0.57 per share and has a dividend yield of 4.1%. Axis Capital pays out -49.5% of its earnings in the form of a dividend. Donegal Group pays out 190.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Axis Capital has increased its dividend for 11 consecutive years and Donegal Group has increased its dividend for 2 consecutive years.

Earnings and Valuation

This table compares Axis Capital and Donegal Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Axis Capital $4.59 billion 1.04 -$368.96 million ($3.15) -18.21
Donegal Group $739.03 million 0.54 $7.11 million $0.30 46.80

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

Profitability

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

Net Margins Return on Equity Return on Assets
Axis Capital -6.16% -3.63% -0.68%
Donegal Group -1.92% -2.36% -0.58%

Insider & Institutional Ownership

89.4% of Axis Capital shares are owned by institutional investors. Comparatively, 30.9% of Donegal Group shares are owned by institutional investors. 2.0% of Axis Capital shares are owned by insiders. Comparatively, 13.1% of Donegal Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Axis Capital and Donegal Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Axis Capital 0 6 2 0 2.25
Donegal Group 0 1 1 0 2.50

Axis Capital currently has a consensus target price of $61.13, suggesting a potential upside of 6.58%. Donegal Group has a consensus target price of $18.50, suggesting a potential upside of 31.77%. Given Donegal Group’s stronger consensus rating and higher possible upside, analysts plainly believe Donegal Group is more favorable than Axis Capital.

Summary

Donegal Group beats Axis Capital on 10 of the 16 factors compared between the two stocks.

About Axis Capital

AXIS Capital Holdings Limited, through its subsidiaries, provides various specialty insurance and reinsurance products worldwide. It operates through two segments, Insurance and Reinsurance. The Insurance segment offers property insurance for commercial buildings, residential premises, construction projects, and onshore energy installations; marine insurance covering offshore energy, cargo, liability, recreational marine, fine art, specie, hull, and war; and terrorism, aviation, credit and political risk, and liability insurance. It also provides professional lines insurance that cover directors' and officers' liability, errors and omissions liability, employment practices liability, fiduciary liability, crime, professional indemnity, cyber and privacy, medical malpractice, and other financial insurance related coverages for commercial enterprises, financial institutions, and not-for-profit organizations. In addition, this segment offers accidental death, travel, and specialty health products for employer and affinity groups, as well as accident and health reinsurance for catastrophic or per life events through wholesale and retail brokers, managing general agents, and underwriters. The Reinsurance segment offers reinsurance to insurance companies, including catastrophe; property reinsurance covering property damage and related losses resulting from natural and man-made perils; professional lines; and credit and surety. This segment also provides agriculture reinsurance; coverage for various types of construction risks and risks related to erection, testing, and commissioning of machinery and plants during the construction stage; marine, aviation, and personal accident reinsurance; and derivative based risk management products. The company was founded in 2001 and is headquartered in Pembroke, Bermuda.

About Donegal Group

Donegal Group Inc., an insurance holding company, provides 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. Donegal Group Inc., through its interest in Donegal Financial Services Corporation, operates a savings bank. 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.

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