Financial Review: Donegal Group (NASDAQ:DGICA) vs. Powszechny Zaklad Ubezpieczen (OTCMKTS:PZAKY)

Powszechny Zaklad Ubezpieczen (OTCMKTS:PZAKY) and Donegal Group (NASDAQ:DGICA) are both financial services companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings for Powszechny Zaklad Ubezpieczen and Donegal Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Powszechny Zaklad Ubezpieczen	0	0	0	0	N/A
Donegal Group	0	1	0	0	2.00

Donegal Group has a consensus target price of $15.00, indicating a potential upside of 11.94%. Given Donegal Group’s higher possible upside, analysts plainly believe Donegal Group is more favorable than Powszechny Zaklad Ubezpieczen.

Valuation and Earnings

This table compares Powszechny Zaklad Ubezpieczen and Donegal Group’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Powszechny Zaklad Ubezpieczen	N/A	N/A	N/A	C$3.58	3.39
Donegal Group	$927.34 million	0.48	$4.43 million	$0.14	95.71

Donegal Group has higher revenue and earnings than Powszechny Zaklad Ubezpieczen. Powszechny Zaklad Ubezpieczen 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 Powszechny Zaklad Ubezpieczen and Donegal Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Powszechny Zaklad Ubezpieczen	N/A	N/A	N/A
Donegal Group	0.48%	0.40%	0.08%

Insider and Institutional Ownership

28.0% of Donegal Group shares are held by institutional investors. 5.0% of Donegal Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Powszechny Zaklad Ubezpieczen pays an annual dividend of C$1.20 per share and has a dividend yield of 9.9%. Donegal Group pays an annual dividend of $0.68 per share and has a dividend yield of 5.1%. Powszechny Zaklad Ubezpieczen pays out 33.6% of its earnings in the form of a dividend. Donegal Group pays out 485.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Donegal Group has increased its dividend for 10 consecutive years. Powszechny Zaklad Ubezpieczen is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Donegal Group beats Powszechny Zaklad Ubezpieczen on 9 of the 12 factors compared between the two stocks.

About Powszechny Zaklad Ubezpieczen

POWSZECHNY Zaklad Ubezpieczen SA provides life and non-life insurance products and services in Poland, the Baltic States, and Ukraine. It operates through Corporate Insurance, Mass Insurance, Group and Individually Continued Life Insurance, Individual Life Insurance, Investments, Pension Insurance, Banking, Baltic States, Ukraine, Investment Contracts, and Other segments. The company offers motor, property, casualty, agricultural, fire, and third-party liability insurance, as well as health, accident, and life insurance. It also provides banking, factoring, medical, hospital, physical therapy, asset management, assistance, leasing, IT, call center, brokerage, and spa services; manages pension and mutual funds; and offers financial and accounting services. In addition, the company is involved in buying, operating, renting, and selling real estate properties; investment activity; and consulting and training, and other monetary intermediation businesses. Further, it engages in the production and sale of radiators and sanitary fittings, bathroom accessories, and fittings; and auxiliary activity associated with insurance and pension funds. Powszechny Zaklad Ubezpieczen SA was founded in 1803 and is headquartered in Warsaw, Poland.

About Donegal Group

Donegal Group Inc., an insurance holding company, provides property and casualty insurance to businesses and individuals. It operates through three 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; and homeowners policies, which provide coverage for damage to residences and their contents from a range of perils, including fire, lightning, windstorm, and theft, as well as liability of the insured arising from injury to other persons or their property. It also 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 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 primarily to Mid-Atlantic, Midwestern, New England, Southern, and Southwestern regions through independent insurance agencies. Donegal Group Inc. was incorporated in 1986 and is based in Marietta, Pennsylvania. Donegal Group Inc. operates as a subsidiary of Donegal Mutual Insurance Company.