Critical Comparison: Skyward Specialty Insurance Group (NASDAQ:SKWD) and Donegal Group (NASDAQ:DGICA)

Donegal Group (NASDAQ:DGICA) and Skyward Specialty Insurance Group (NASDAQ:SKWD) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Valuation and Earnings

This table compares Donegal Group and Skyward Specialty Insurance Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Donegal Group	$989.60 million	0.53	$4.43 million	$1.52	10.25
Skyward Specialty Insurance Group	$1.09 billion	1.79	$85.98 million	$3.28	14.83

Skyward Specialty Insurance Group has higher revenue and earnings than Donegal Group. Donegal Group is trading at a lower price-to-earnings ratio than Skyward Specialty Insurance Group, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations for Donegal Group and Skyward Specialty Insurance Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Donegal Group	0	0	0	0	0.00
Skyward Specialty Insurance Group	0	4	6	1	2.73

Skyward Specialty Insurance Group has a consensus price target of $51.44, suggesting a potential upside of 5.74%. Given Skyward Specialty Insurance Group’s stronger consensus rating and higher possible upside, analysts clearly believe Skyward Specialty Insurance Group is more favorable than Donegal Group.

Volatility & Risk

Donegal Group has a beta of -0.02, suggesting that its stock price is 102% less volatile than the S&P 500. Comparatively, Skyward Specialty Insurance Group has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.

Profitability

This table compares Donegal Group and Skyward Specialty Insurance Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Donegal Group	5.14%	9.50%	2.02%
Skyward Specialty Insurance Group	12.24%	16.39%	3.57%

Institutional & Insider Ownership

28.0% of Donegal Group shares are owned by institutional investors. Comparatively, 94.8% of Skyward Specialty Insurance Group shares are owned by institutional investors. 6.6% of Donegal Group shares are owned by company insiders. Comparatively, 8.0% of Skyward Specialty Insurance Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Skyward Specialty Insurance Group beats Donegal Group on 15 of the 15 factors compared between the two stocks.

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.

About Skyward Specialty Insurance Group

Skyward Specialty Insurance Group, Inc., an insurance holding company, underwrites commercial property and casualty insurance products in the United States. It offers general liability, excess liability, professional liability, commercial auto, group accident and health, property, surety, and workers' compensation insurance products. Skyward Specialty Insurance Group, Inc. was incorporated in 2006 and is headquartered in Houston, Texas.