KFS - Kingsway: Weak Q4 2023 Results And The Valuation Looks Stretched (Rating Downgrade)

2024-03-12 05:20:34 ET

Summary

• The warranty business struggled, and the company’s latest acquisitions barely improved the adjusted EBITDA of the KSx segment.
• I expect the adjusted EBITDA run-rate for the operating companies to surpass $20 million for 2024.
• However, Kingsway is starting to look expensive, as it has rarely traded above 30x EV/EBITDA for long periods of time in the past year.

Investment thesis

I’ve been following Kingsway Financial Services ( KFS ) closely and I’ve written two articles about the company on SA. The latest of them was in October 2023 and back then I said that new acquisitions under the KSx platform should still improve the company’s EV/EBITDA ratio....

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