FG Nexus (NASDAQ:FGNX) & Kingsway Financial Services (NYSE:KWY) Critical Review

Kingsway Financial Services (NYSE:KWY) and FG Nexus (NASDAQ:FGNX) are both small-cap financial services companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Kingsway Financial Services and FG Nexus, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kingsway Financial Services	1	0	0	0	1.00
FG Nexus	1	1	3	0	2.40

FG Nexus has a consensus price target of $35.00, indicating a potential upside of 403.60%. Given FG Nexus’ stronger consensus rating and higher probable upside, analysts plainly believe FG Nexus is more favorable than Kingsway Financial Services.

Risk & Volatility

Kingsway Financial Services has a beta of 0.23, suggesting that its stock price is 77% less volatile than the S&P 500. Comparatively, FG Nexus has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500.

Institutional & Insider Ownership

72.4% of Kingsway Financial Services shares are held by institutional investors. Comparatively, 3.1% of FG Nexus shares are held by institutional investors. 41.4% of Kingsway Financial Services shares are held by company insiders. Comparatively, 4.1% of FG Nexus shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Kingsway Financial Services and FG Nexus”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kingsway Financial Services	$134.97 million	2.18	-$10.73 million	($0.40)	-25.38
FG Nexus	$2.41 million	18.05	-$66.74 million	$12.77	0.54

Kingsway Financial Services has higher revenue and earnings than FG Nexus. Kingsway Financial Services is trading at a lower price-to-earnings ratio than FG Nexus, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Kingsway Financial Services and FG Nexus’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kingsway Financial Services	-8.83%	-72.50%	-5.67%
FG Nexus	N/A	-82.99%	-62.64%

Summary

FG Nexus beats Kingsway Financial Services on 8 of the 14 factors compared between the two stocks.

About Kingsway Financial Services

Kingsway Financial Services Inc., through its subsidiaries, engages in the extended warranty business services, asset management, and real estate businesses. The company operates through three segments: Extended Warranty, Leased Real Estate, and Kingsway Search Xcelerator. The Extended Warranty segment markets, sells, and administers vehicle service agreements and related products for new and used automobiles, motorcycles, and ATVs. This segment also sells new home warranty products, as well as offers uninsured warrant administration services to homebuilders and homeowners; markets and distributes warranty products to manufacturers, distributors, and installers of heating, ventilation and air conditioning, standby generator, commercial LED lighting, and commercial refrigeration equipment; and provides equipment breakdown and maintenance support services to companies. The Leased Real Estate segment owns a parcel of real property consisting of approximately 192 acres located in the State of Texas. The Kingsway Search Xcelerator offers outsourced finance and human resources consulting services, including operational accounting, such as bookkeeping, accounting, financial reporting, and analysis and strategic finance services; technical accounting comprising initial public offerings, SEC reporting, and international consolidation services; human resources, workforce management, and compliance support services; and advisory services. The company offers its products and services through credit unions, dealers, homebuilders, and consumers. Kingsway Financial Services Inc. was incorporated in 1989 and is based in Itasca, Illinois.

About FG Nexus

FG Financial Group, Inc. operates as a reinsurance and investment management holding company in the United States. The company offers specialty property and casualty reinsurance products and services. It also operates a special purpose acquisition company platform (SPAC) that provides various strategic, administrative, and regulatory support services to newly formed SPACs for a monthly fee. The company was formerly known as 1347 Property Insurance Holdings, Inc. and changed its name to FG Financial Group, Inc. in December 2020. The company was incorporated in 2012 and is based in St. Petersburg, Florida.