Financial Comparison: Donegal Group (NASDAQ:DGICA) vs. Marsh & McLennan Companies (NYSE:MRSH)
by Danessa Lincoln · The Markets DailyMarsh & McLennan Companies (NYSE:MRSH – Get Free Report) and Donegal Group (NASDAQ:DGICA – Get Free Report) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, profitability, dividends, earnings and analyst recommendations.
Institutional & Insider Ownership
88.0% of Marsh & McLennan Companies shares are held by institutional investors. Comparatively, 28.0% of Donegal Group shares are held by institutional investors. 0.4% of Marsh & McLennan Companies shares are held by insiders. Comparatively, 2.8% of Donegal Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Dividends
Marsh & McLennan Companies pays an annual dividend of $3.96 per share and has a dividend yield of 2.3%. Donegal Group pays an annual dividend of $0.77 per share and has a dividend yield of 4.2%. Marsh & McLennan Companies pays out 48.4% of its earnings in the form of a dividend. Donegal Group pays out 39.9% 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. Marsh & McLennan Companies has raised its dividend for 15 consecutive years and Donegal Group has raised its dividend for 5 consecutive years. Donegal Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Ratings
This is a summary of current ratings and target prices for Marsh & McLennan Companies and Donegal Group, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Marsh & McLennan Companies | 1 | 10 | 5 | 2 | 2.44 |
| Donegal Group | 1 | 1 | 1 | 0 | 2.00 |
Marsh & McLennan Companies currently has a consensus price target of $203.69, suggesting a potential upside of 19.64%. Donegal Group has a consensus price target of $20.00, suggesting a potential upside of 9.47%. Given Marsh & McLennan Companies’ stronger consensus rating and higher possible upside, equities analysts plainly believe Marsh & McLennan Companies is more favorable than Donegal Group.
Profitability
This table compares Marsh & McLennan Companies and Donegal Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Marsh & McLennan Companies | 14.24% | 32.67% | 8.44% |
| Donegal Group | 7.38% | 10.65% | 2.83% |
Earnings & Valuation
This table compares Marsh & McLennan Companies and Donegal Group”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Marsh & McLennan Companies | $26.98 billion | 3.01 | $4.16 billion | $8.18 | 20.81 |
| Donegal Group | $978.01 million | 0.69 | $79.34 million | $1.93 | 9.47 |
Marsh & McLennan Companies has higher revenue and earnings than Donegal Group. Donegal Group is trading at a lower price-to-earnings ratio than Marsh & McLennan Companies, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Marsh & McLennan Companies has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500. Comparatively, Donegal Group has a beta of -0.03, suggesting that its share price is 103% less volatile than the S&P 500.
Summary
Marsh & McLennan Companies beats Donegal Group on 15 of the 18 factors compared between the two stocks.
About Marsh & McLennan Companies
Marsh & McLennan Cos., Inc. is a professional services firm, which engages in offering clients advice and solutions in risk, strategy, and people. It operates through the Risk and Insurance Services, and Consulting segments. The Risk and Insurance Services segment is involved in risk management activities, as well as insurance and reinsurance broking and services. The Consulting segment offers health, wealth, and career solutions and products, and specialized management, strategic, economic, and brand consulting services. The company was founded by Henry W. Marsh and Donald R. McLennan in 1871 and is headquartered in New York, NY.
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.