Donegal (DGICA)
NASDAQ:DGICA
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Donegal Group
(NASDAQ:DGICA)
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Rating:71Outperform
Price Target:
$18.50
▲(3.64% Upside)
Action:Reiterated
Date:06/02/26
The score is driven primarily by solid financial strength (low leverage, improved profitability, and good cash conversion) and supportive valuation (low P/E and ~4.37% dividend yield). These positives are tempered by weak technicals (trading below major moving averages) and mixed recent operating performance discussed on the earnings call, including elevated catastrophe losses, a higher combined ratio, and a sharp drop in quarterly net income.
Positive Factors
Conservative Balance Sheet
Very low leverage and meaningful equity growth provide durable capital flexibility for underwriting volatility, absorbing catastrophe shocks, supporting reinsurance purchase and enabling consistent dividend/capital returns without forcing disruptive capital raises.
Negative Factors
Elevated Weather & Cat Losses
Materially higher weather and catastrophe impacts increase underwriting volatility and strain combined ratios. Persistent or worsening climate-driven losses raise reinsurance costs and require sustained underwriting discipline, pressuring long-term margin predictability.
Read all positive and negative factors
Positive Factors
Negative Factors
Conservative Balance Sheet
Very low leverage and meaningful equity growth provide durable capital flexibility for underwriting volatility, absorbing catastrophe shocks, supporting reinsurance purchase and enabling consistent dividend/capital returns without forcing disruptive capital raises.
Read all positive factors
Donegal Group (DGICA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$636.24M
Dividend Yield3.51%
Average Volume (3M)119.35K
Price to Earnings (P/E)9.2
Beta (1Y)0.33
Revenue Growth-2.46%
EPS Growth-11.49%
CountryUS
Employees410
SectorFinancial
Sector Strength70
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)1.83
Shares Outstanding31,472,828
10 Day Avg. Volume124,213
30 Day Avg. Volume119,350
Financial Highlights & Ratios
PEG Ratio0.18
Price to Book (P/B)0.96
Price to Sales (P/S)0.63
P/FCF Ratio8.75
Enterprise Value/Market Cap0.98
Enterprise Value/Revenue0.64
Enterprise Value/Gross Profit2.21
Enterprise Value/Ebitda7.40
Forecast
1Y Price Target
$18.00Price Target Upside0.84% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)1.8
Revenue Forecast (FY)$901.98M
Donegal Group Business Overview & Revenue Model
Company Description
Donegal Group Inc., an insurance holding company, provides personal and commercial lines of property and casualty insurance to businesses and individuals. It operates through three segments: Investment Function, Personal Lines of Insurance, and Co...
How the Company Makes Money
Donegal Group makes money primarily through (1) underwriting property-and-casualty insurance and (2) investing the funds it holds from policyholders ("float"). Underwriting revenue is generated from insurance premiums charged on policies across co...
Donegal Group Earnings Call Summary
Earnings Call Date:Apr 30, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 23, 2026
Earnings Call Sentiment Neutral
The call presented a mix of positive strategic and financial developments alongside meaningful near-term underwriting headwinds. Positives include a strong investment income increase (+19%), improved yields, continued technology modernization with a cloud migration and Gen AI plans, solid core underwriting metrics, strong personal lines profitability (statutory combined ratio 85.7%) and healthy retention rates (commercial 82.3%, personal 88.7%). Negatives were driven primarily by elevated weather and fire losses that doubled the weather impact year-over-year, a higher combined ratio (99.8% vs 91.6% prior year), a commercial underwriting loss (statutory combined 104.6%), a 13.1% decline in personal premiums written, and a ~54% drop in after-tax net income to $11.5 million. Overall, management emphasized disciplined underwriting, targeted growth, expense control and long-term investments to address these challenges.Positive Updates
Improved Investment Income and Yields
Net investment income of $14.3 million for Q1 2026, a 19% increase versus $12.0 million in Q1 2025. Average tax-equivalent yield rose to 3.94% from 3.50% (increase of 44 bps). Invested $63 million in the quarter at a 5.39% yield; received $44 million of portfolio cash flow yielding 4.67%. Projected $135 million of bond cash flow over next 12 months at a current average yield of 4.45%. Book value per share increased to $17.54, up 1.2% from $17.33 at 12/31/2025.
Negative Updates
Combined Ratio Deterioration and Lower Net Income
GAAP combined ratio worsened to 99.8% in Q1 2026 from 91.6% in Q1 2025. After-tax net income fell to $11.5 million from $25.2 million in the prior-year quarter (decline of ~54%), driven by elevated losses and reduced favorable reserve development.
Read all updates
Q1-2026 Updates
Positive
Negative
Improved Investment Income and Yields
Net investment income of $14.3 million for Q1 2026, a 19% increase versus $12.0 million in Q1 2025. Average tax-equivalent yield rose to 3.94% from 3.50% (increase of 44 bps). Invested $63 million in the quarter at a 5.39% yield; received $44 million of portfolio cash flow yielding 4.67%. Projected $135 million of bond cash flow over next 12 months at a current average yield of 4.45%. Book value per share increased to $17.54, up 1.2% from $17.33 at 12/31/2025.
Read all positive updates
Company Guidance
The company guided that it will continue to pursue disciplined premium growth and profitability while migrating core Guidewire claims and billing systems to the cloud (claims/billing moving in early 2027) and accelerating Gen AI deployments in 2027, noting modest near-term expense pressure from the migration; Q1 metrics included net premiums earned of $221.4M (‑4.9% YoY), net premiums written down 3.2% (personal ‑13.1%, commercial +2.2%), rate increases averaging 5.6% (6.4% ex‑workers’ comp) and a commercial rate/exposure increase of 9% ex‑WC, real retention of 82.3% (commercial) and 88.7% (personal), combined ratio 99.8% (vs 91.6), core loss ratio 53.4% (improved from 54.2), statutory combined ratios of 104.6% (commercial) and 85.7% (personal), weather losses of $17.2M (7.8 p.p., well above the 5‑yr Q1 average of 4.5 p.p.; homeowners $8.0M or 25.6 p.p.; commercial property $7.6M or 13.9 p.p.), large fire impact 5.5 p.p., favorable prior‑year development $5.7M (2.6 p.p.), expense ratio 35.4% (projected to tick up slightly for the cloud migration), after‑tax net income $11.5M (vs $25.2M), net investment income $14.3M (+19% YoY) with avg tax‑equivalent yield 3.94% (vs 3.50), $44M cash flow yielding 4.67%, $63M invested at 5.39%, and projected $135M of bond cash flow over 12 months at a 4.45% average—along with portfolio and underwriting actions (e.g., >$150M reduction in retained umbrella limits in Q1) and an increased quarterly dividend reflecting management’s confidence.Donegal Group Financial Statement Overview
Summary
Income Statement
67
Positive
Balance Sheet
86
Very Positive
Cash Flow
72
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 969.21M | 978.01M | 989.61M | 927.34M | 848.22M | 816.47M |
| Gross Profit | 281.35M | 260.90M | 225.18M | 163.95M | 141.71M | 167.02M |
| EBITDA | 83.96M | 102.02M | 67.16M | 10.01M | 1.82M | 37.07M |
| Net Income | 65.65M | 79.34M | 50.86M | 4.43M | -1.96M | 25.25M |
Balance Sheet | ||||||
| Total Assets | 1.85B | 2.39B | 2.34B | 2.27B | 2.24B | 2.26B |
| Cash, Cash Equivalents and Short-Term Investments | 510.89M | 521.17M | 695.38M | 645.45M | 606.24M | 603.03M |
| Total Debt | 35.00M | 35.00M | 35.00M | 35.00M | 35.00M | 35.00M |
| Total Liabilities | 1.20B | 1.75B | 1.79B | 1.79B | 1.76B | 1.72B |
| Stockholders Equity | 649.09M | 640.42M | 545.78M | 479.75M | 483.59M | 531.04M |
Cash Flow | ||||||
| Free Cash Flow | 64.62M | 70.20M | 67.44M | 28.58M | 67.11M | 76.73M |
| Operating Cash Flow | 64.62M | 70.20M | 67.44M | 28.62M | 67.11M | 76.73M |
| Investing Cash Flow | -81.63M | -91.13M | -48.04M | -16.71M | -98.50M | -62.20M |
| Financing Cash Flow | -11.81M | -5.21M | 9.73M | -13.25M | -1.20M | -59.92M |
Donegal Group Technical Analysis
Negative
17.85
Price Trends
17.09
Negative
17.49
Negative
18.16
Negative
Market Momentum
-0.06
Positive
37.26
Neutral
24.92
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DGICA, the sentiment is Negative. The current price of 17.85 is above the 20-day moving average (MA) of 17.12, above the 50-day MA of 17.09, and below the 200-day MA of 18.16, indicating a bearish trend. The MACD of -0.06 indicates Positive momentum. The RSI at 37.26 is Neutral, neither overbought nor oversold. The STOCH value of 24.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DGICA.
Donegal Group Risk Analysis
Donegal Group disclosed 23 risk factors in its most recent earnings report. Donegal Group reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Donegal Group Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $1.12B | 8.45 | 14.36% | 1.73% | 10.58% | 96.22% | |
78 Outperform | $1.01B | 5.08 | 37.50% | 2.18% | 3.57% | 198.87% | |
75 Outperform | $643.42M | 3.18 | 43.68% | ― | 1.25% | 157.31% | |
71 Outperform | $636.24M | 9.18 | 10.41% | 3.51% | -2.46% | -11.49% | |
68 Neutral | $1.02B | 15.68 | 7.16% | 4.59% | 10.67% | -13.23% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
67 Neutral | $505.48M | 4.58 | 33.02% | ― | 10.65% | 39.18% |
* Financial Sector Average
DGICA
Donegal Group
16.72
-2.05
-10.93%
SAFT
Safety Insurance Group
68.34
-7.41
-9.78%
UFCS
United Fire Group
43.79
16.22
58.86%
UVE
Universal Insurance Holdings
35.48
8.71
32.54%
ACIC
American Coastal Insurance
10.09
-0.22
-2.12%
HRTG
Heritage Insurance Holdings
21.22
-3.08
-12.67%
Donegal Group Corporate Events
Executive/Board ChangesShareholder Meetings
Donegal Group Stockholders Approve Directors, Pay and Auditor
Positive
Apr 17, 2026
Donegal Group reported the results of its annual stockholders meeting held on April 16, 2026, where 8,165,424 votes were represented out of 8,719,393 eligible, reflecting strong shareholder participation. Stockholders elected Kevin G. Burke, David...
Dividends
Donegal Group Increases Quarterly Dividend for Class A and B
Positive
Apr 16, 2026
On April 16, 2026, Donegal Group Inc. announced that its board of directors approved an increase in the regular quarterly cash dividend to $0.1925 per share for Class A common stock and $0.175 per share for Class B common stock. The dividends, whi...
Financial Disclosures
Donegal Group Schedules First-Quarter 2026 Earnings Release
Neutral
Apr 6, 2026
Donegal Group Inc., a regional property and casualty insurance holding company operating in 21 U.S. states through the A.M. Best A-rated Donegal Insurance Group, trades its Class A and B common stock on the NASDAQ Global Select Market under the sy...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.