NODK

We rate NI Holdings, Inc. (NODK) as a Reduce with a composite score of 45.2/100 at a current price of $13.25. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (72th percentile) and value (45th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (33th percentile) and quality (34th percentile) tempers our overall conviction. We assign a No Moat rating (24/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

NI Holdings, Inc. holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 45.2/100 places it at rank #2759 in our full 7,333-stock universe. At $285M in market capitalization, NI Holdings, Inc. is a small-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -13% combined with momentum at the 33th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 22% (-54.0pp vs sector) narrow to operating margins of -4% (-20.9pp vs sector) and net margins of -3.0%, yielding a gross-to-net conversion rate of -13%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $13.25, NI Holdings, Inc. is trading near fair value based on current fundamentals. Our value factor score of 45/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at EV/EBITDA of 5.9x (discounted to peers), P/B of 1.1x, P/S of 0.9x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Medium uncertainty rating to NI Holdings, Inc.. The stock presents a balanced risk profile: current negative profitability (net margin -3.0%) and weak quality scores (34th percentile). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: current negative profitability (net margin -3.0%); weak quality scores (34th percentile); low beta of 0.43 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 72th percentile and quality factor at the 34th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: conservative leverage (1% D/E) limits balance sheet risk; above-average stability (72th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate NI Holdings, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-4.1%), negative profitability, weak asset returns (ROA -1.8%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — NI Holdings, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, NI Holdings, Inc. receives a Reduce rating with a composite score of 45.2/100 (rank #2759 of 7,333). Our quantitative framework assigns a No Moat (24/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 46/100.

Our analysis does not support a constructive view on NI Holdings, Inc. at this time. The combination of limited competitive advantages, medium uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.