DONEGAL GROUP INC (DGICB) Stock Analysis
DONEGAL GROUP INC
▾ What's in the 41/100 risk score? (higher = riskier)
Contributions (weight × component score) sum to the total. This near-term score now includes fundamental health (leverage, FCF trend). It excludes the Altman Z score, whose retained-earnings input this filer does not report separately. See the Financial Health section for the full balance-sheet read.
How to read DGICB (bank / insurer)
Banks and insurers are valued on what they earn on their capital, not on free cash flow — a normal DCF misleads here.
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Bank / Insurance lens (P/TBV + ROE) ↓
Price-to-tangible-book versus return-on-equity is how analysts actually judge a bank cheap or rich.
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Financial-health screens ↓
Watch the trend in profitability and asset quality, not the (not-applicable) bankruptcy score.
Standard DCF doesn't fit DGICB well — but that's expected for this kind of business. The Bank / Insurance Valuation Lens below uses the metrics actually used by analysts who value property & casualty insurance. Reverse DCF + Football Field also work as cross-checks.
Quality & solvency checks
Cheap stocks can be cheap for a reason. These screens warn when a low valuation comes paired with structural fragility.
Why it matters: Cheap-looking stocks (low P/E or P/B) often have low Z-scores because the market knows the company is dying. Z-score warns you before you fall into a value trap.
Reference: > 3.0 = safe zone · 1.81–3.0 = grey zone · < 1.81 = distress zone
Full explanation →
Altman Z was calibrated on industrial firms and doesn't apply to banks or insurers — their balance sheets are dominated by loans/securities, not working capital. See the Bank Valuation Lens above for P/B, ROE and ROA — the metrics regulators and analysts actually use to assess bank solvency.
Why it matters: High score = fundamentals improving. Low score = deteriorating. Especially powerful for filtering cheap stocks: cheap + high F-score historically outperforms; cheap + low F-score is often a value trap.
Reference: 7–9 = strong · 4–6 = mediocre · 0–3 = weak
Full explanation →
Piotroski F was built for non-financial firms (gross margin, asset turnover, current ratio all assume an industrial cost structure). For banks, the equivalent quality signals are efficiency ratio, net interest margin, and provision coverage — see the Bank Valuation Lens above.
A standard discounted cash flowDCF — Discounted Cash Flow — sums up all future cash a business will produce, adjusted for the fact that future dollars are worth less than dollars today.
Why it matters: It is the most fundamentally honest valuation method when applicable — but only works for companies with predictable, positive cash flow.
Reference: Best for: mature, profitable businesses. Fails for: pre-profit growth, banks, REITs.
Full explanation → valuation is not meaningful for Donegal Group Inc. because, as a financial institution, its value is better assessed using a residual income model, which focuses on book value and excess earnings. Investors are likely focused on the company's consistent profitability and positive operating cash flow, as indicated by its latest net income and operating cash flow being positive. The #1 quantifiable risk is its franchise/durability score of 2/5, suggesting limited competitive advantages.
As of 3 months ago
Anatomy of a share
What you're buying per share. Bars are at the same scale so you can see the relative size of revenue, costs, cash flow, and debt — not just read them in a table.
What you actually need to decide
Every stock price is a disagreement. Here's the single thing that must go right for the bulls, the single thing that breaks the thesis, and the concrete signposts to watch so you can update your view as real results arrive.
- Growth in net premiums earned in upcoming quarters
- Stability of underwriting margins
- Trends in investment income
The trend, in plain numbers (FY2024 → FY2025, latest reported)
Straight from the financial statements — no model, no opinion. For a small or unprofitable company, the direction of these numbers usually tells you more than any single valuation.
- Free cash flow rose to $69.2M.
- Net income grew +56% to $79.3M.
- Revenue fell -1% to $978.0M.
Management & Leadership
Donald Nikolaus serves as the President and Chief Executive Officer of Donegal Group Inc., a position he has held for many years. He also serves as the Chairman of the Board, providing long-standing leadership to the company.
What They Make
Donegal Group Inc. is an insurance holding company that provides property and casualty insurance products through its insurance subsidiaries. Its customers are individuals and businesses seeking coverage for various risks.
End Markets
Revenue Drivers
Why Is It Priced Like This?
Why Customers Pay
What we use instead: earnings (P/E, EV/EBIT), book value & return on equity (P/TBV + ROE — how banks are actually judged) — computed from the figures this company does report, shown in the sections below. Those numbers are unaffected by the missing cash-flow data.
The market prices DGICB based on its consistent profitability and positive cash flow, rather than a traditional DCFDCF — Discounted Cash Flow — sums up all future cash a business will produce, adjusted for the fact that future dollars are worth less than dollars today.
Why it matters: It is the most fundamentally honest valuation method when applicable — but only works for companies with predictable, positive cash flow.
Reference: Best for: mature, profitable businesses. Fails for: pre-profit growth, banks, REITs.
Full explanation → model, as it is a financial institution. Its latest net income and operating cash flow are positive, which likely reassures investors about its financial health and ability to generate earnings. The market is likely focused on the stability of its insurance operations and its ability to generate consistent returns on its book value.
Business Model & Valuation
How They Make Money
Donegal Group Inc. funds itself through premiums and investment income, and it typically pays dividends to shareholders, though specific rates are not provided in the FLAGS.
Residual Income
Balance-sheet financial (Property & Casualty Insurance): residual income model - book value is meaningful anchor.
Show advanced inputs
| Sector Default | 8.0% |
What this model does NOT do: this is a consolidated owner-earnings FCF model. Standalone segment assumptions: none. It does not project premium growth, underwriting (combined ratio) and investment income independently; their combined effect is embedded in the historical revenue and cash-flow trend the model extrapolates. The calculator above can only approximate a segment's impact through the single consolidated growth rate — it cannot model any one line separately. For a true segment-level view, build a separate model from the company's segment disclosures.
Maturity & Competitive Position
Moat Signals
Revenue has been growing at 4.6%/yr over the last four years, from $816M to $978M.
Geography & Markets
Donegal Group Inc. primarily operates in the Mid-Atlantic, Northeast, and Southern regions of the United States. Specific geographic mix percentages are not available from current data sources.
Geographic Risks
Market Signals
These are timing signals, not value signals — they describe the stock's recent price behavior, not what the business is worth. Use them for the "the thesis looks good, but is now the moment?" question. Each tile below explains what it's saying.
Why it matters: Short-term contrarian indicator. Extreme readings often precede mean reversion, though not always.
Reference: 30–70 normal · >70 overbought · <30 oversold
Full explanation → (14)53.7NeutralMomentum is balanced — neither overbought nor oversold.
Why it matters: When the fast line crosses above the slow line, short-term momentum is turning up; below, turning down. A timing cue, not a value signal.
Reference: Line above signal = bullish momentum · below = bearish
Full explanation →BearishLine below signalThe fast trend is below the slow trend — short-term momentum is currently downward.
Technicals describe price, not the business. A great company can have a "bearish" tape (a buying chance) and a weak one a "bullish" tape (a trap). Pair these with the valuation and health sections above.
QUALITY
Data Quality & Risk Flags (8 notes — click to expand/collapse)
Guardrail Notes (8)
- Financial sector: using residual income model. IV = Book Value + PV(excess earnings).
- Discount rate floored from 7.5% to 9.0% (financial sector minimum).
- Terminal growth (3%) capped to 2.3% (80% of near-term growth 2.9%).
- Shares from unknown — per-share values may be less accurate.
- Illiquidity discount 25% applied (small/micro-cap — harder to exit, demand a margin).
- Shares/market cap missing or defaulted; per-share valuation unreliable.
- Shares defaulted to 1; IV is NOT meaningful — treat as data-unavailable.
- DATA UNAVAILABLE: per-share values suppressed due to missing/unreliable shares data.
FINANCIALS
Financial Statements (5-year tables — click to expand)
From DONEGAL GROUP INC's SEC filings (EDGAR).
Income (5yr)
| Year | Revenue | Net Income | EPS |
|---|---|---|---|
| 2025 | 978.0M | 79.3M | — |
| 2024 | 989.6M | 50.9M | — |
| 2023 | 927.3M | 4.4M | — |
| 2022 | 848.2M | -2.0M | — |
| 2021 | 816.5M | 25.3M | — |
Cash Flow (5yr)
Capital expenditure isn't tagged in this filer's machine-readable data (the CapEx column shows "—"). The free-cash-flow column is therefore operating cash flow less stock-based compensation only — an upper bound on true owner earnings, not the real figure. Companies that report capex under a custom label (some large IFRS filers do) look better here than they are.
| Year | Operating CF | CapEx | − SBC & adj. | Free Cash Flow |
|---|---|---|---|---|
| 2025 | 70.2M | — | 1.0M | 69.2M |
| 2024 | 67.4M | — | 980,911 | 66.5M |
| 2023 | 28.6M | — | 876,569 | 27.7M |
| 2022 | 67.1M | — | 818,853 | 66.3M |
| 2021 | 76.7M | — | 965,701 | 75.8M |
How we define FCF: operating cash flow − capital expenditure − stock-based compensation (owner-earnings basis — SBC is a real cost to shareholders even though it's non-cash). Latest year: 70.2M − — − 1.0M (SBC & adj.) = 69.2M. This is the same owner-earnings FCF definition the valuation model uses, though the DCF's starting value is a EPS basis (residual-income model), not this single year.
Balance Sheet
| Total Assets | 2.4B |
| Total Liabilities | 1.7B |
| Equity | 640.4M |
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