Head-To-Head Review: Investors Title (NASDAQ:ITIC) & Donegal Group (NASDAQ:DGICA)

Donegal Group (NASDAQ:DGICA) and Investors Title (NASDAQ:ITIC) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, earnings, analyst recommendations, risk, profitability, valuation and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Donegal Group and Investors Title, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Donegal Group	0	1	0	0	2.00
Investors Title	0	0	0	0	0.00

Donegal Group presently has a consensus target price of $18.00, suggesting a potential downside of 6.98%. Given Donegal Group’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Donegal Group is more favorable than Investors Title.

Dividends

Donegal Group pays an annual dividend of $0.73 per share and has a dividend yield of 3.8%. Investors Title pays an annual dividend of $1.84 per share and has a dividend yield of 0.9%. Donegal Group pays out 35.6% of its earnings in the form of a dividend. Investors Title pays out 11.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Donegal Group has increased its dividend for 5 consecutive years. Donegal Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Donegal Group and Investors Title”s top-line 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	0.71	$50.86 million	$2.05	9.44
Investors Title	$258.30 million	1.54	$31.07 million	$15.70	13.38

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

Risk & Volatility

Donegal Group has a beta of 0.02, meaning that its share price is 98% less volatile than the S&P 500. Comparatively, Investors Title has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500.

Profitability

This table compares Donegal Group and Investors Title’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Donegal Group	7.06%	12.82%	2.91%
Investors Title	11.37%	11.44%	8.74%

Institutional and Insider Ownership

28.0% of Donegal Group shares are held by institutional investors. Comparatively, 41.4% of Investors Title shares are held by institutional investors. 3.5% of Donegal Group shares are held by company insiders. Comparatively, 26.4% of Investors Title shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Investors Title beats Donegal Group on 9 of the 16 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 Investors Title

Investors Title Company engages in the issuance of residential and commercial title insurance for residential, institutional, commercial, and industrial properties. The company underwrites land title insurance for owners and mortgagees as a primary insurer; and assumes the reinsurance of title insurance risks from other title insurance companies. It offers services in connection with tax-deferred exchanges of like-kind property; acts as a qualified intermediary in tax-deferred exchanges of property; coordinates the exchange aspects of the real estate transaction, such as drafting standard exchange documents, holding the exchange funds between the sale of the old property and the purchase of the new property, and accepting the formal identification of the replacement property. In addition, it serves as an exchange accommodation titleholder for accomplishing reverse exchanges when the taxpayers decide to acquire replacement property before selling the relinquished property. Further, the company offers investment management and trust services to individuals, companies, banks, and trusts; and consulting and management services to clients to start and operate a title insurance agency. It issues title insurance policies directly and through a network of agents in 22 states and the District of Columbia, primarily in the eastern half of the United States. Investors Title Company was founded in 1972 and is headquartered in Chapel Hill, North Carolina.