Kingsway Financial Services (KFS) AI Stock Analysis

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Kingsway Financial Services

(NYSE:KFS)

55Neutral

Kingsway Financial Services scores a 55, reflecting significant financial challenges with high leverage and negative profitability despite strong gross margins. The technical analysis shows bullish momentum, but the valuation is concerning with a negative P/E ratio. The earnings call highlighted growth through acquisitions but also noted declines in profitability. Overall, while there is potential for growth, the company faces substantial risks.

Kingsway Financial Services (KFS) vs. S&P 500 (SPY)

Market Cap

$286.39M

Dividend YieldN/A

Average Volume (3M)36.53K

Price to Earnings (P/E)―

Beta (1Y)0.65

Revenue Growth5.53%

EPS Growth-124.90%

CountryUS

Employees433

SectorConsumer Cyclical

Sector Strength75

IndustryAuto - Dealerships

Share Statistics

EPS (TTM)-0.13

Shares Outstanding27,537,151

10 Day Avg. Volume41,787

30 Day Avg. Volume36,533

Financial Highlights & Ratios

PEG Ratio1.02

Price to Book (P/B)14.66

Price to Sales (P/S)0.00

P/FCF Ratio-29.13

Enterprise Value/Market Cap1.06

Enterprise Value/Revenue0.68

Enterprise Value/Gross Profit5.76

Enterprise Value/Ebitda19.43

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Kingsway Financial Services Business Overview & Revenue Model

Company DescriptionKingsway Financial Services (KFS) is a diversified financial services company operating primarily in the insurance sector. It specializes in providing property and casualty insurance, along with extended warranty services. The company aims to deliver innovative financial solutions to meet the evolving needs of its clients, thereby enhancing their financial security and stability.

How the Company Makes MoneyKingsway Financial Services generates revenue through various streams, primarily focused on insurance premiums and service fees. The company's key revenue sources include underwriting income from property and casualty insurance policies and fees from extended warranty services. Additionally, KFS engages in strategic investments and partnerships to enhance its financial offerings and expand its market reach, which contributes to its earnings. By managing risk effectively and optimizing its investment portfolio, the company maximizes returns and sustains profitability.

Kingsway Financial Services Financial Statement Overview

Summary

Kingsway Financial Services faces challenges in profitability and cash flow, with positive aspects in gross profit margins and debt management. The company has limited revenue growth and negative net income, impacting overall financial health. High reliance on liabilities and negative cash flow metrics indicate potential risks in financial stability and liquidity.

Income Statement

Positive

Kingsway Financial Services has shown a positive gross profit margin of 75.6% for the most recent year, indicating strong cost management relative to revenue. However, the company has a negative net income, leading to a negative net profit margin of -8.6%, which raises concerns about profitability. The revenue growth rate from the previous year is modest at 1.6%, showing limited growth momentum. EBIT and EBITDA margins are relatively low at 2.0%, reflecting challenges in operational efficiency.

Balance Sheet

Neutral

The company has a low debt-to-equity ratio of 0.0 due to no outstanding debt, which is positive for financial stability. However, the return on equity (ROE) is negative at -112.3%, driven by negative net income and low equity levels, highlighting inefficiencies. The equity ratio stands at 4.5%, suggesting a high reliance on liabilities to finance assets, which poses a risk.

Cash Flow

Negative

Kingsway's free cash flow growth rate shows improvement but remains negative, indicating ongoing cash flow challenges. The operating cash flow to net income ratio is low at -0.06, suggesting insufficient cash generation relative to net income. Free cash flow to net income ratio is also negative, reflecting cash flow issues that could impact future operations.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
109.38M	107.66M	114.69M	94.78M	65.72M
	Gross Profit
82.65M	76.03M	90.61M	87.72M	63.02M
	EBIT
2.16M	954.00K	37.57M	-21.35M	-21.59M
	EBITDA
2.16M	5.93M	30.13M	3.24M	14.11M
	Net Income Common Stockholders
-9.27M	23.56M	24.72M	1.86M	-5.42M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.49M	9.26M	64.33M	12.80M	14.53M
	Total Assets
186.62M	197.72M	285.65M	475.63M	452.47M
	Total Debt
60.22M	45.61M	103.31M	295.19M	271.50M
	Net Debt
54.73M	36.52M	39.14M	282.55M	257.13M
	Total Liabilities
168.31M	173.11M	263.53M	412.96M	387.00M
	Stockholders Equity
16.66M	27.71M	21.68M	773.00K	4.51M
Cash Flow		Free Cash Flow
358.00K	-26.39M	11.89M	-6.74M	1.46M
	Operating Cash Flow
1.07M	-26.19M	-14.57M	-5.91M	1.67M
	Investing Cash Flow
-16.85M	6.46M	100.94M	-8.60M	4.01M
	Financing Cash Flow
11.44M	-39.96M	-37.93M	-540.00K	13.60M

Kingsway Financial Services Technical Analysis

Technical Analysis Sentiment

Positive

Last Price11.23

Price Trends

50DMA

8.27

Positive

100DMA

8.13

Positive

200DMA

8.29

Positive

Market Momentum

MACD

0.54

Negative

RSI

78.57

Negative

STOCH

84.62

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KFS, the sentiment is Positive. The current price of 11.23 is above the 20-day moving average (MA) of 8.98, above the 50-day MA of 8.27, and above the 200-day MA of 8.29, indicating a bullish trend. The MACD of 0.54 indicates Negative momentum. The RSI at 78.57 is Negative, neither overbought nor oversold. The STOCH value of 84.62 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KFS.

Kingsway Financial Services Risk Analysis

Kingsway Financial Services disclosed 33 risk factors in its most recent earnings report. Kingsway Financial Services reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Kingsway Financial Services Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CARS	74 Outperform	$683.58M	15.86	9.35%	―	2.24%	-57.33%
CRMT	71 Outperform	$421.52M	56.70	1.50%	―	-2.26%	―
Sector *	62 Neutral	$6.98B	11.38	2.86%	3.90%	2.64%	-22.07%
CANG	58 Neutral	$442.11M	6.63	0.12%	―	40.31%	-204.86%
KFS	55 Neutral	$286.39M	―	-46.36%	―	5.53%	-124.90%
RMBL	48 Neutral	$79.13M	―	-130.43%	―	-14.45%	78.09%
SDA	46 Neutral	$320.11M	―	-167.38%	―	―	―

* Consumer Cyclical Sector Average

Performance Comparison

KFS

Kingsway Financial Services

11.23

3.23

40.38%

CRMT

America's Car-Mart

50.98

-11.07

-17.84%

CARS

Cars

10.66

-7.84

-42.38%

RMBL

RumbleON

2.04

-4.23

-67.46%

CANG

Cango

4.34

2.78

178.21%

SDA

SunCar Technology Group

3.01

-4.89

-61.90%

Kingsway Financial Services Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: 26.32%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strategic acquisitions and growth in specific segments, such as KSX and extended warranty cash sales. However, there were notable declines in adjusted EBITDA and challenges in the extended warranty segment, leading to a balanced view of the company's performance.

Q1-2025 Updates

Positive Updates

Acquisition of MLC Plumbing

Kingsway Financial Services Inc. acquired MLC Plumbing, a 100+ year-old business, for $5 million, contributing approximately $800,000 of annual adjusted EBITDA.

Acquisition of Viewpoint

Viewpoint, a leading cloud-native timeshare software provider, was acquired, adding over $1 million of unaudited annual recurring revenue and $200,000 of unaudited EBITDA.

Revenue and EBITDA Growth in KSX

The KSX segment's revenue and adjusted EBITDA each grew 23% year on year.

Extended Warranty Cash Sales Increase

Cash sales in the extended warranty segment grew 3.7% year over year and 9.3% sequentially.

New Board Appointments

Two new independent directors, Adam Patinkin and Joshua Horowitz, were appointed to strengthen leadership and corporate governance.

Negative Updates

Decline in Consolidated Adjusted EBITDA

Consolidated adjusted EBITDA declined by $800,000 versus the prior year quarter due to lower profitability in the extended warranty segment and higher holdcoat costs.

Decrease in Extended Warranty EBITDA

Extended warranty adjusted EBITDA for the first quarter of 2025 was $800,000, down from $1.4 million in the year-ago quarter.

SNS Revenue Growth with EBITDA Decline

SNS experienced a 7.5% revenue growth but a slight decline in adjusted EBITDA year over year.

PWI and Penn Revenue and EBITDA Down

Both revenue and adjusted EBITDA for PWI and Penn were down year over year in the first quarter.

Company Guidance

During the Kingsway Financial Services Inc. Q1 2025 earnings call, CEO JT Fitzgerald and CFO Kent Hansen provided guidance that highlighted significant growth metrics and strategic acquisitions. For the KSX segment, revenue and adjusted EBITDA rose by 23% year on year, with notable contributions from recent acquisitions like Bud's Plumbing and Viewpoint, which added $800,000 and $200,000 to annual adjusted EBITDA, respectively. SPI Software and Viewpoint together achieved an ARR approaching $5 million and double-digit EBITDA margins. The extended warranty segment also showed signs of recovery, with cash sales growing by 3.7% year over year and 9.3% sequentially, while trailing twelve-month modified cash EBITDA rose by 11.7%. Overall, Kingsway's consolidated revenue increased by 8.4% to $28.3 million, despite a decline in consolidated adjusted EBITDA due to lower profitability in the extended warranty segment and higher M&A expenses. The management expressed optimism for continued growth, emphasizing a robust deal pipeline and strong strategic fit of their recent acquisitions.

Kingsway Financial Services Corporate Events

Business Operations and Strategy

Kingsway Financial Hosts Investor Day at NYSE

Neutral

May 19, 2025

On May 18, 2025, Kingsway Financial Services, Inc. announced the posting of an investor presentation on its website. The company also revealed plans to host an Investor Day at the New York Stock Exchange on May 19, 2025, which will be live-streamed for participants.

Spark’s Take on KFS Stock

According to Spark, TipRanks’ AI Analyst, KFS is a Neutral.

To see Spark’s full report on KFS stock, click here.

Private Placements and Financing

Kingsway Financial Services Raises $2M via Preferred Stock

Neutral

May 19, 2025

On May 8, 2025, Kingsway Financial Services Inc., a Delaware corporation, conducted a private placement of 80,000 shares of a newly created Class D Preferred Stock, raising $2,000,000. This stock, offered without registration under the Securities Act, features conversion options into common stock, preferential dividends, and specific redemption terms, positioning it as a senior class of capital stock. The issuance is expected to impact the company’s financial structure by introducing a new class of preferred stock with fixed, cumulative dividends and a liquidation preference, potentially affecting stakeholders’ interests and the company’s capital strategy.

Spark’s Take on KFS Stock

According to Spark, TipRanks’ AI Analyst, KFS is a Neutral.

To see Spark’s full report on KFS stock, click here.

Executive/Board Changes

Kingsway Financial Services Director Resigns, New Appointment Made

Neutral

Apr 15, 2025

On April 11, 2025, Charles Frischer resigned from his position as a director and member of the Audit Committee at Kingsway Financial Services Inc., with no disagreements cited as the reason for his departure. Subsequently, Adam Patinkin, already serving on the company’s Board of Directors, was appointed to the Audit Committee, indicating a seamless transition in the company’s governance structure.

Spark’s Take on KFS Stock

According to Spark, TipRanks’ AI Analyst, KFS is a Neutral.

Kingsway Financial Services shows a moderate overall performance. Strengths lie in positive revenue and EBITDA growth and strategic acquisitions, as highlighted in the earnings call. Technical analysis presents a neutral outlook with mixed signals. However, the company’s financial performance is weakened by negative net income and cash flow issues, while valuation is negatively impacted by a high P/E ratio and lack of dividends.

To see Spark’s full report on KFS stock, click here.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.