Advanced insurance agency Reliance Global Group, Inc. (RELI - Get Rating) in Lakewood, N.J., is making progress by rapidly adding new states to the nationwide rollout of its 5MinuteInsure.com platform. 

Simultaneously, RELI is exploring opportunistic acquisitions of cash-flow-positive agencies at attractive multiples to expand its national footprint further and enhance its operating efficiency. The stock has a consensus rating of ‘Buy.’

In terms of the trailing-12-month asset turnover ratio, RELI’s 0.41% is 93.8% higher than the 0.21% industry average. In addition, the stock has gained 249.7% in price over the past month and 153.9% over the past three months to close yesterday’s trading session at $6.75. And its revenues are expected to increase with the reopening of the economy. So, RELI’s near-term prospects look bright.

So, here is what I think could influence RELI’s performance in the coming months:

Improving Financials

RELI’s revenues increased 54% year-over-year to $2.58 million in the third quarter, ended Sept. 30, 2021. The company’s EBITDA loss declined 88% year-over-year to $87,000, while its net loss came in at $595,233, representing a 51.7% year-over-year decrease. Also, its loss per share was  $0.05, down 83.3% year-over-year.

Growth Initiatives

On Dec.22, 2021, RELI announced a definitive agreement to acquire Medigap Health Insurance Company. Ezra Beyman, RELI’s CEO, said, “This planned acquisition would expand our capabilities within the Medicare supplement market, which we believe would be a perfect complement and highly synergistic with our existing portfolio companies. In addition to bolstering our revenue by more than 70%, we believe this transaction has the potential to be highly accretive.”

Selling Shares to Fund Growth Activities

On Dec.23, 2021, RELI priced a private placement of preferred stock, common stock, and warrants for gross proceeds of $20 million. The company intends to use the net proceeds from the private placement to fund its planned acquisition of Medigap, to support expanded marketing activities around 5MinuteInsure.com, and for general working capital and administrative purposes.

Bottom Line

RELI has been showing continued revenue growth and scalability of its business model. Also, we think it is well-positioned to benefit from the expected rise in interest rates. So, it could be wise to add the stock to one’s watch list.

RELI shares were trading at $5.88 per share on Friday afternoon, down $0.87 (-12.89%). Year-to-date, RELI has declined -8.70%, versus a -1.67% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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