Is Kingsway Financial Services, Inc. overvalued or undervalued?

As of 8 May 2024, the valuation grade for Kingsway Financial Services, Inc. has moved from fair to risky, indicating a shift in perception regarding its financial health. The company appears to be overvalued given its current metrics, particularly with a Price to Book Value of 18.80 and a negative ROE of -33.70%. Additionally, the EV to EBITDA ratio stands at a concerning 70.68, which further supports the notion of overvaluation.
When comparing Kingsway to its peers, it is notable that Skyward Specialty Insurance Group, Inc. has a P/E ratio of 19.07, while Donegal Group, Inc. presents a more attractive P/E of 10.48. This stark contrast highlights the challenges Kingsway faces in justifying its current valuation. Furthermore, despite Kingsway's strong stock performance relative to the S&P 500 over the past year, with a return of 64.26% compared to the index's 10.26%, the underlying financial ratios suggest that the company's stock price may not be sustainable at these levels.