Meadowbrook Insurance Group (NYSE: MIG) and Donegal Group (NASDAQ:DGICA) are both small-cap property & casualty insurance – nec companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, earnings, risk, valuation and dividends.

Earnings and Valuation

This table compares Meadowbrook Insurance Group and Donegal Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Meadowbrook Insurance Group N/A N/A N/A $0.53 16.30
Donegal Group $688.42 million 0.68 $30.80 million $0.57 30.14

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

Dividends

Donegal Group pays an annual dividend of $0.56 per share and has a dividend yield of 3.3%. Meadowbrook Insurance Group does not pay a dividend. Donegal Group pays out 98.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

28.8% of Donegal Group shares are held by institutional investors. 11.9% of Donegal Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Meadowbrook Insurance Group 4.54% 7.19% 1.16%
Donegal Group 2.13% 2.81% 0.75%

Analyst Ratings

This is a summary of current recommendations and price targets for Meadowbrook Insurance Group and Donegal Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Meadowbrook Insurance Group 0 0 0 0 N/A
Donegal Group 0 0 2 0 3.00

Donegal Group has a consensus target price of $19.50, suggesting a potential upside of 13.50%. Given Donegal Group’s higher probable upside, analysts plainly believe Donegal Group is more favorable than Meadowbrook Insurance Group.

Summary

Donegal Group beats Meadowbrook Insurance Group on 7 of the 11 factors compared between the two stocks.

About Meadowbrook Insurance Group

Meadowbrook Insurance Group, Inc. (Meadowbrook) is a holding company. The Company is a commercial insurance underwriter and insurance administration services company. The Company markets and underwrites specialty property and casualty insurance programs and products through a network of independent retail agents, wholesalers, program administrators and general agents. The Company’s products include Admitted Programs and Standard Market Products, Main Street Excess and Surplus Lines, Non-Admitted Programs, and Specialty Market Products. The Company is also involved in a range of activities, including program and product design, underwriting risk selection and policy issuance, claims administration and handling, loss prevention and control and reinsurance. The Company also provides the following services to its fee-for-service and agency clients: administration of risk-bearing entities and agency services.

About Donegal Group

Donegal Group Inc. (DGI) is an insurance holding company whose insurance subsidiaries offer personal and commercial lines of property and casualty insurance. The Company offered its insurance business to various businesses and individuals in 21 Mid-Atlantic, Midwestern, New England and Southern states, as of December 31, 2016. It has four segments: investment function, personal lines of insurance, commercial lines of insurance and investment in Donegal Financial Services Corporation (DFSC). Its insurance operations include two segments: personal lines of insurance and commercial lines of insurance. The personal lines of insurance, which its insurance subsidiaries write consists of private passenger automobile and homeowners insurance. The commercial lines of insurance, which its insurance subsidiaries write consists of commercial automobile, commercial multi-peril and workers’ compensation insurance. It holds interests in DFSC, which is a unitary savings and loan holding company.

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