Head to Head Survey: Donegal Group (DGICA) versus Montpelier Re (MRH)

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

Dividends

Donegal Group pays an annual dividend of $0.56 per share and has a dividend yield of 3.4%. Montpelier Re 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.

Valuation & Earnings

This table compares Donegal Group and Montpelier Re’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Donegal Group $688.42 million 0.65 $30.80 million $0.57 28.77
Montpelier Re N/A N/A N/A $3.84 11.09

Donegal Group has higher revenue and earnings than Montpelier Re. Montpelier Re 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 Donegal Group and Montpelier Re’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Donegal Group 2.13% 2.81% 0.75%
Montpelier Re 35.71% 13.24% 6.70%

Institutional and Insider Ownership

29.5% 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 company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Donegal Group and Montpelier Re, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Donegal Group 0 0 2 0 3.00
Montpelier Re 0 0 0 0 N/A

Donegal Group presently has a consensus target price of $19.50, suggesting a potential upside of 18.90%. Given Donegal Group’s higher possible upside, research analysts plainly believe Donegal Group is more favorable than Montpelier Re.

Summary

Donegal Group beats Montpelier Re on 7 of the 12 factors compared between the two stocks.

Donegal Group Company Profile

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.

Montpelier Re Company Profile

Montpelier RE Holdings Ltd. is a holding company. The Company provides customized insurance and reinsurance solutions to the global market. Through its affiliates in Bermuda, it provides institutional and retail investors with direct access to the global property reinsurance market. It operates in three segments: Montpelier Bermuda, which consists of the assets and operations of Montpelier Reinsurance Ltd., which is its wholly owned operating subsidiary based in Pembroke, Bermuda and is registered as a Bermuda Class four insurer; Montpelier at Lloyd’s, which consists of the assets and operations of Montpelier Syndicate 5151, Montpelier Capital Limited, Montpelier at Lloyd’s Limited, Montpelier Underwriting Services Limited and Montpelier Underwriting Inc., and Collateralized Reinsurance, which is marketed under the name Blue Capital. Blue Capital is an asset management platform offering property catastrophe reinsurance-linked investment products to institutional and retail investors.

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