Definity Financial Corp. (DFY) AI Stock Analysis

• Market Cap: C$8.62B
• Dividend Yield: 1.02%
• Average Volume (3M): 167.55K
• Price to Earnings (P/E): 20.9
• Beta (1Y): 0.54
• Revenue Growth: 18.98%
• EPS Growth: 0.82%
• Country: CA
• Employees: 3,442
• Sector: Financial
• Sector Strength: 70
• Industry: Insurance - Property & Casualty
• EPS (TTM): 0.84
• Shares Outstanding: 121,600,000
• 10 Day Avg. Volume: 196,800
• 30 Day Avg. Volume: 167,546
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$80.80
• Price Target Upside: 14.01% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 73 Outperform
• Price Target: C$81.00 ▲(14.29% Upside)

Definity Financial Corp. has a strong financial foundation with solid profitability and a robust balance sheet, which are the most significant factors contributing to its score. The technical analysis indicates a neutral trend, while the valuation is reasonable but not particularly compelling. The absence of earnings call data and corporate events means these factors do not influence the score.

Positive Factors

Strong Profitability

Improved net profit margin indicates efficient cost management and strong pricing power, enhancing long-term profitability and competitiveness.

Balance Sheet Health

A low debt-to-equity ratio suggests financial stability and flexibility, allowing the company to invest in growth opportunities without excessive risk.

Cash Flow Growth

Strong free cash flow growth indicates robust cash generation, supporting reinvestment in the business and potential shareholder returns.

Negative Factors

Slowing Revenue Growth

Slowing revenue growth may signal market saturation or increased competition, potentially impacting future earnings and market position.

Free Cash Flow Conversion

Suboptimal conversion of net income to free cash flow suggests inefficiencies in cash management, which could affect liquidity and investment capacity.

Debt Increase

Increasing debt levels, although currently low, could lead to higher financial risk if not managed carefully, impacting long-term financial health.

Definity Financial Corp. Business Overview & Revenue Model

Company Description

Definity Financial Corporation, together with its subsidiaries, provides property and casualty insurance products in Canada. It offers personal insurance products, including auto, property, general and umbrella liability, and pet insurance products to individuals under the Economical, Sonnet, Family, Petsecure, and Peppermint brands; and commercial insurance products comprising fleet, commercial auto, property, liability, and specialty insurance products to businesses under the Economical brand name. The company distributes its products on a primarily intermediated basis, and through brokers, as well as directly to customers. Definity Financial Corporation was formerly known as Economical Holdings Corporation and changed its name to Definity Financial Corporation in August 2021. Definity Financial Corporation was founded in 1871 and is headquartered in Waterloo, Canada.

How the Company Makes Money

Definity Financial Corp. generates revenue primarily through the underwriting of insurance policies and collecting premiums from policyholders. The company assesses and prices risk to offer competitive insurance products, which include auto, home, and commercial insurance policies. Revenue streams are derived from these premiums, as well as from investment income generated by investing the premiums collected. Definity also benefits from strategic partnerships and distribution channels that expand its market reach and customer base, contributing to its overall financial performance. The company's earnings are influenced by factors such as claims experience, investment returns, and operational efficiency.

Definity Financial Corp. Financial Statement Overview

Summary

Definity Financial Corp. demonstrates solid financial health with strong profitability, efficient operations, and a robust balance sheet. The company has managed to grow its revenue and maintain healthy margins, although the pace of revenue growth has slowed. The balance sheet is well-managed with low leverage, and cash flow generation is strong, though there is room for improvement in converting net income to free cash flow. Overall, the financial position is stable, with a positive outlook if growth can be sustained.

Income Statement

Definity Financial Corp. shows strong revenue growth with a TTM (Trailing-Twelve-Months) revenue growth rate of 3.6% and consistent profitability. The gross profit margin is robust at 42.2%, and the net profit margin has improved to 10.7% in the TTM. The EBIT and EBITDA margins are healthy, indicating efficient operations. However, the revenue growth rate has slowed compared to previous years, which could be a concern if the trend continues.

Balance Sheet

The company maintains a solid balance sheet with a low debt-to-equity ratio of 0.039, reflecting conservative leverage. Return on equity is strong at 11.5%, demonstrating effective use of shareholder funds. The equity ratio is stable, indicating a strong capital base. However, the slight increase in debt over the years should be monitored.

Cash Flow

Cash flow performance is commendable with a 10.3% growth in free cash flow in the TTM. The operating cash flow to net income ratio is strong, although the free cash flow to net income ratio is slightly below 1, suggesting room for improvement in cash generation relative to net income. The company has shown resilience in maintaining positive cash flow growth, despite fluctuations in previous years.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.65B	4.53B	3.91B	3.25B	2.92B	2.70B
Gross Profit	1.54B	4.53B	3.93B	3.25B	2.92B	2.70B
EBITDA	670.50M	713.60M	578.30M	165.20M	335.70M	252.40M
Net Income	388.50M	430.40M	350.10M	252.00M	213.20M	153.90M
Balance Sheet
Total Assets	8.30B	7.69B	7.26B	8.32B	7.89B	6.62B
Cash, Cash Equivalents and Short-Term Investments	659.70M	504.90M	197.50M	2.99B	3.59B	2.91B
Total Debt	146.70M	149.50M	149.90M	70.80M	18.90M	21.70M
Total Liabilities	4.30B	4.19B	4.25B	5.84B	5.50B	4.80B
Stockholders Equity	3.76B	3.32B	2.85B	2.37B	2.40B	1.82B
Cash Flow
Free Cash Flow	338.80M	231.60M	264.30M	166.10M	605.80M	447.40M
Operating Cash Flow	423.90M	307.20M	351.80M	256.90M	655.20M	490.20M
Investing Cash Flow	-717.50M	-298.00M	-351.90M	-374.70M	-1.04B	-74.60M
Financing Cash Flow	292.70M	-113.80M	-61.00M	73.40M	376.80M	0.00

Definity Financial Corp. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 70.87
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:DFY, the sentiment is Negative. The current price of 70.87 is below the 20-day moving average (MA) of 72.77, below the 50-day MA of 73.15, and above the 200-day MA of 66.70, indicating a neutral trend. The MACD of -0.37 indicates Positive momentum. The RSI at 41.19 is Neutral, neither overbought nor oversold. The STOCH value of 8.43 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:DFY.

Definity Financial Corp. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FFH	81 Outperform	C$58.09B	8.28	16.10%	0.89%	16.79%	20.82%
ONEX	77 Outperform	C$8.45B	12.00	6.09%	0.32%	-8.63%	-27.09%
IFC	77 Outperform	C$47.01B	20.20	12.58%	1.97%	5.25%	15.06%
IAG	75 Outperform	C$14.16B	14.18	12.86%	2.41%	-4.55%	42.41%
DFY	73 Outperform	C$8.62B	20.90	11.48%	1.02%	18.98%	0.82%
ELF	68 Neutral	C$5.65B	4.61	14.83%	919.50%	-23.51%	1.19%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%

Definity Financial Corp. Corporate Events

Definity Financial Announces $1 Billion Private Placement to Fund Acquisition

Definity Financial Corporation announced a $1 billion private placement of senior unsecured notes in two series to accredited investors in Canada. The proceeds from this placement are intended to fund part of the acquisition of the Canadian operations of The Travelers Companies, Inc. This strategic move is expected to strengthen Definity’s market position in the Canadian insurance industry. The private placement is co-led by RBC Capital Markets and TD Securities and is subject to customary conditions, with an expected closing date of September 12, 2025.

The most recent analyst rating on (TSE:DFY) stock is a Buy with a C$81.00 price target. To see the full list of analyst forecasts on Definity Financial Corp. stock, see the TSE:DFY Stock Forecast page.

Definity Financial Corp. Reports Strong Q2 2025 Results and Announces Major Acquisition

Definity Financial Corp. reported a strong financial performance for the second quarter of 2025, with a 9.1% growth in gross written premiums and a combined ratio of 92.9%. The company announced a major acquisition of Travelers’ Canadian operations for $3.3 billion, which is expected to significantly enhance its growth strategy and position it as a top player in the Canadian insurance market. The acquisition is anticipated to close in the first quarter of 2026, pending regulatory approvals. Definity’s financial results also showed a solid book value per share increase of 19.9% from the previous year, reflecting strong operational performance and strategic investments.

The most recent analyst rating on (TSE:DFY) stock is a Hold with a C$53.00 price target. To see the full list of analyst forecasts on Definity Financial Corp. stock, see the TSE:DFY Stock Forecast page.