Value
9.0/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 9.0 |
| P/S | 9.8 |
| EV/EBITDA | 7.2 |
| Fwd P/E | 9.3 |
- ▸Forward P/E: 10.0x
- ▸Attractively valued
DGICA · Why this verdict
Why Donegal Group (DGICA) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Donegal Group is a cheaply valued property and casualty insurer with notable insider buying and a 4.1% dividend, but it trades above the analyst target with slipping revenue and weak quality.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Quality is 3.2/10 with free cash flow at 59% of net income and no moat, while revenue fell about 2.4% from $247.1M to $241.1M year over year. Quality breakdown | Cash conversion improves and revenue returns to growth over the next four quarters. | ↓Deteriorating |
| CounterQuarterly revenue has been fairly steady at $236M to $246M, so the decline may be cyclical rather than structural. | ||
At $18.82 the stock is above the $17.85 analyst target (target-implied upside of -5.2%), with 6.1% downside to the stop. Estimated upside | Analysts raise targets above the share price within 12 months. | ↓Deteriorating |
| CounterThe golden cross and momentum of 7.2/10 suggest the market is re-rating ahead of the only 2 analysts covering the stock. | ||
Insiders bought $2,416,951 of stock, equal to 0.347% of market cap, a notable buying signal. Insider breakdown | Insiders remain net buyers over the next two quarters. | →Stable |
| CounterA single large purchase can reflect one person's view rather than broad insider conviction. | ||
Forward P/E is 10.0x with a PEG of 0.33 and a 4.1% dividend yield, which together signal an attractive valuation. Valuation breakdown | Valuation and the dividend are maintained as earnings stabilize. | ↑Improving |
| CounterA low multiple on declining revenue may be a value trap, and the dividend depends on insurance underwriting results. | ||
EPS beat in 2 and missed in 2 of the last 4 quarters, with a 23.26% beat in July 2026 offset by a -20.0% miss in April 2026. Last 4 quarters | Earnings surprises turn consistently positive across the next four reports. | ↑Improving |
| CounterThe next report is only 5 days away and the average surprise is roughly -0.11%, so results are essentially in line at best. | ||
Quality is 3.2/10 with free cash flow at 59% of net income and no moat, while revenue fell about 2.4% from $247.1M to $241.1M year over year.
↓DeterioratingQuality breakdown
- Expectation
- Cash conversion improves and revenue returns to growth over the next four quarters.
CounterQuarterly revenue has been fairly steady at $236M to $246M, so the decline may be cyclical rather than structural.
At $18.82 the stock is above the $17.85 analyst target (target-implied upside of -5.2%), with 6.1% downside to the stop.
↓DeterioratingEstimated upside
- Expectation
- Analysts raise targets above the share price within 12 months.
CounterThe golden cross and momentum of 7.2/10 suggest the market is re-rating ahead of the only 2 analysts covering the stock.
Insiders bought $2,416,951 of stock, equal to 0.347% of market cap, a notable buying signal.
→StableInsider breakdown
- Expectation
- Insiders remain net buyers over the next two quarters.
CounterA single large purchase can reflect one person's view rather than broad insider conviction.
Forward P/E is 10.0x with a PEG of 0.33 and a 4.1% dividend yield, which together signal an attractive valuation.
↑ImprovingValuation breakdown
- Expectation
- Valuation and the dividend are maintained as earnings stabilize.
CounterA low multiple on declining revenue may be a value trap, and the dividend depends on insurance underwriting results.
EPS beat in 2 and missed in 2 of the last 4 quarters, with a 23.26% beat in July 2026 offset by a -20.0% miss in April 2026.
↑ImprovingLast 4 quarters
- Expectation
- Earnings surprises turn consistently positive across the next four reports.
CounterThe next report is only 5 days away and the average surprise is roughly -0.11%, so results are essentially in line at best.
Per-dimension breakdown
Quality
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.6 |
| ROA | 1.5 |
| Gross margin | 0.0 |
| Op margin | 3.8 |
| Net margin | 3.6 |
| Current ratio | 2.0 |
| Moat | 4.6 |
| Piotroski F | 3.3 |
- ▸No competitive moat
- ▸Weak Piotroski F-Score: 3/9
- ▸Quality concerns
Growth
0.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.7 |
| EPS growth | 0.0 |
- ▸Declining revenue: -3%
Momentum
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 7.3 |
| OBV | 6.2 |
| MA position | 8.0 |
| Volume | 4.1 |
- ▸Above 200-MA but MA slope flat
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.0 |
| Analyst rating | 5.9 |
| Price target | 6.7 |
- ▸LLM news sentiment: +0.40 (n=1)
- ▸Light analyst coverage (2.0) — signal dampened
Insider
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 8.0 |
| insider conviction | 6.3 |
| holder change | 6.9 |
| notable moves | 7.0 |
- ▸Notable insider buying — $2,416,951 (0.348% of mkt cap)
Peer rank
5.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.1 |
| quality rank | 2.4 |
| growth rank | 1.5 |
- ▸Conservative debt levels
Technical
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.1 |
| support resistance | 3.1 |
| 52w position | 8.6 |
Risk (lower is worse)
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.9 |
| days to cover | 4.3 |
| volatility | 5.3 |
| implied vol | 2.1 |
| debt equity | 9.8 |
- ▸High IV: 67%
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 4.2 |
| dividend safety | 5.5 |
| news activity | 6.0 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 4.1%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (6)
- MOMENTUM:6.1>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:107d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-0.8=NEGATIVE
- 8K_CRITICAL:4.01
Warning (0)
none
Reward-to-Risk
-0.81
Upside
-4.8%
Downside
5.9%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 61, MACD bullish
EdgeInst Constrain — Small cap ($0.7B) below institutional reach
SuitabilitySpeculative — Binary industry: Insurance - Property & Casualty
Investment implication
The SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's -0.8=NEGATIVE outcome against Value at 9.0 and asymmetric R:R of -0.81.
The strongest dimensions are Value at 9.0, Insider at 7.0, and Sentiment at 6.5; the weakest are Growth at 0.8, Quality at 2.8, and Technical at 4.6. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -0.81 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Price Above Analyst Target
Trip ifAnalyst target rises above $22 from the current $17.85.
- P2Notable Insider Buying
Trip ifInsiders sell more than $1M in net value over a 90-day period.
- P3Attractive Valuation And Dividend
Trip ifForward P/E rises above 14x from the current 10.0x.
- P4Weak Quality Slipping Revenue
Trip ifFree cash flow to net income falls below 40% from the current 59%.
- P5Uneven Earnings Surprises
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.