Critical Review: Donegal Group (NASDAQ:DGICB) & Fidelis Insurance (NYSE:FIHL)

Donegal Group (NASDAQ:DGICB) and Fidelis Insurance (NYSE:FIHL) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their dividends, risk, earnings, institutional ownership, profitability, valuation and analyst recommendations.

Dividends

Donegal Group pays an annual dividend of $0.70 per share and has a dividend yield of 3.7%. Fidelis Insurance pays an annual dividend of $0.60 per share and has a dividend yield of 2.4%. Donegal Group pays out 39.3% of its earnings in the form of a dividend. Fidelis Insurance pays out 27.1% 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 increased its dividend for 5 consecutive years. Donegal Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

1.2% of Donegal Group shares are held by institutional investors. Comparatively, 82.0% of Fidelis Insurance shares are held by institutional investors. 8.6% of Donegal Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Donegal Group and Fidelis Insurance’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%
Fidelis Insurance	9.02%	8.62%	1.62%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Donegal Group and Fidelis Insurance, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Donegal Group	0	1	0	0	2.00
Fidelis Insurance	2	2	3	0	2.14

Fidelis Insurance has a consensus price target of $21.92, indicating a potential downside of 11.45%. Given Fidelis Insurance’s stronger consensus rating and higher probable upside, analysts clearly believe Fidelis Insurance is more favorable than Donegal Group.

Volatility and Risk

Donegal Group has a beta of 0.01, indicating that its share price is 99% less volatile than the S&P 500. Comparatively, Fidelis Insurance has a beta of 0.36, indicating that its share price is 64% less volatile than the S&P 500.

Valuation & Earnings

This table compares Donegal Group and Fidelis Insurance”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Donegal Group	$978.01 million	0.73	$79.34 million	$1.78	10.76
Fidelis Insurance	$2.17 billion	1.10	$225.50 million	$2.21	11.20

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

Summary

Fidelis Insurance beats Donegal Group on 12 of the 17 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, 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. 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.

About Fidelis Insurance

Fidelis Insurance Holdings Limited, a specialty insurer, provides insurance and reinsurance solutions in Bermuda, the Republic of Ireland, and the United Kingdom. It operates in three segments: Specialty, Reinsurance, and Bespoke segments. The Specialty segment offers aviation and aerospace, energy, marine, property direct and facultative, and other specialty risk solutions. The Reinsurance segment provides property, retrocession, and whole account reinsurance solutions. The Bespoke segment offers customized risk solutions for clients that include credit and political risk, as well as other risk transfer opportunities, including political violence and terrorism, limited cyber reinsurance, tax liabilities, title, transactional liabilities, and other bespoke solutions. Fidelis Insurance Holdings Limited was incorporated in 2014 and is headquartered in Pembroke, Bermuda.