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Friday, May 20, 2022

Investors Should be Prudent While Deciding to Invest in FedNat Holding Co. (FNHC) Stock.

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FedNat Holding Co. (FNHC) is an insurance holding company controlling considerably all features of the insurance underwriting, distribution, and claims proceedings via its subsidiaries and contractual agreements. The company is positioned at 32nd rank among its total of 48 competitors. The property and casualty insurance industry has much growth potential as it is estimated to grow in the US at a compound annual growth rate of up to 6% in the forecasted period (up to 2026).

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FNHC: Recent Developments

Most recently, the company received written notification from NASDAQ at the start of April, regarding the non-compliance with the obligations of Nasdaq Listing Rules as it has not timely filed its Annual Report on Form 10-K for the full fiscal year 2021. The notification has no instant effect on the company’s common stock listing. The notification stated the requirement to submit a strategy to regain its NASDAQ compliance by May 31. The company is expected to file its Form 10-K well before the deadline.

FNHC: Earnings

For the full fiscal year of 2021, the company’s revenue was reported to be $245 million with a significant decrease of 43% over the past year. Its revenue lost momentum for the first time in the last five years. The EPS of the company also dropped by 9% to -$6.18 for FY21. The revenue and EPS prediction for FY23 is $288 million and -$0.30 respectively.

Comparison with Peers

When FNHC’s percentage stock price is compared with its contemporaries including KINS, FGF, UIHC, and others, it becomes evident that the company’s stock is well-positioned in terms of percentage change as it just showed a 2.1% increase over the year. UNAM, KINS, and CNFR are the best performers, while NSEC and FGF are the worst performers.

Insider Transactions and Analyst Ratings

The total number of shares of FNHC kept by certain institutions is 33%, whereas approximately 21% of shares are owned by the workers of the company. The total number of outstanding shares in this regard is 17.4 million. Piper Sandler’s analyst Paul Newsome initiated the coverage and rated the company’s stock as overweight, with the announced target price of $7.

Risk Factors

Certain risk factors are associated with FNHC stock such as less than one-year cash runway for the projects, high market volatility over the past three months, and not having a worthy market capitalization.

Bottom Line

As the company is expected to become profitable in the next three years and its earnings growth prediction for the period is 142%, FNHC stock is one of the best penny stock buy options for the investors, who want long-term benefits.

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