Critical Comparison: Kingsway Financial Services (NYSE:KFS) and ProAssurance (NYSE:PRA)

Kingsway Financial Services (NYSE:KFS) and ProAssurance (NYSE:PRA) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, profitability, earnings, analyst recommendations, institutional ownership, dividends and valuation.

Insider & Institutional Ownership

28.9% of Kingsway Financial Services shares are owned by institutional investors. Comparatively, 80.4% of ProAssurance shares are owned by institutional investors. 49.0% of Kingsway Financial Services shares are owned by company insiders. Comparatively, 1.7% of ProAssurance shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Kingsway Financial Services N/A N/A N/A
ProAssurance 3.86% 2.19% 0.72%

Volatility and Risk

Kingsway Financial Services has a beta of -0.28, indicating that its share price is 128% less volatile than the S&P 500. Comparatively, ProAssurance has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Kingsway Financial Services and ProAssurance, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kingsway Financial Services 0 0 0 0 N/A
ProAssurance 1 2 1 0 2.00

ProAssurance has a consensus price target of $41.00, indicating a potential upside of 8.24%. Given ProAssurance’s higher probable upside, analysts clearly believe ProAssurance is more favorable than Kingsway Financial Services.

Dividends

ProAssurance pays an annual dividend of $1.24 per share and has a dividend yield of 3.3%. Kingsway Financial Services does not pay a dividend. ProAssurance pays out 83.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

This table compares Kingsway Financial Services and ProAssurance’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kingsway Financial Services $52.64 million 0.88 -$26.68 million N/A N/A
ProAssurance $886.03 million 2.30 $47.06 million $1.48 25.59

ProAssurance has higher revenue and earnings than Kingsway Financial Services.

Summary

ProAssurance beats Kingsway Financial Services on 11 of the 13 factors compared between the two stocks.

Kingsway Financial Services Company Profile

Kingsway Financial Services Inc., through its subsidiaries, provides property and casualty insurance products in the United States. The company operates through three segments: Insurance Underwriting, Extended Warranty, and Leased Real Estate. The Insurance Underwriting segment offers various automobile insurance products, including liability insurance that covers claims against its insured's responsible for automobile accidents; accident benefit policies or personal injury protection policies that provide coverage for loss of income, medical, and rehabilitation expenses for insured persons who are injured in an automobile accident; and physical damage policies, which cover damages to an insured automobile arising from a collision with another object, as well as from other risks, such as fire or theft. The Extended Warranty segment markets and administers vehicle service agreements and related products for new and used automobiles. This segment also markets and distributes warranty products to manufacturers, distributors, and installers of heating, ventilation and air conditioning, standby generator, commercial LED lighting, and refrigeration equipment; and equipment breakdown and maintenance support services to companies. The Leased Real Estate segment owns the Real Property, which is subject to a long-term triple net lease agreement. The company offers its products and services to credit unions, consumers, and businesses through a network of independent agencies. Kingsway Financial Services Inc. was founded in 1989 and is based in Itasca, Illinois.

ProAssurance Company Profile

ProAssurance Corporation, through its subsidiaries, provides property and casualty insurance, and reinsurance products in the United States. The company operates through Specialty Property and Casualty, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance, and Lloyd's Syndicate segments. It offers professional liability insurance for healthcare professionals and facilities; professional liability insurance for attorneys; liability insurance for medical technology and life sciences risks; and workers' compensation insurance for employers, groups, and associations. The company also participates in Lloyd's of London Syndicate 1729, which underwrites property and casualty insurance, and reinsurance; and Syndicate 6131 that underwrites contingency and specialty property insurance. ProAssurance Corporation markets its products through independent agencies and brokers, as well as an internal sales force. The company was founded in 1976 and is headquartered in Birmingham, Alabama.

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