The era of remote operations has provides a positive jolt to the fintech industry over the past year. People and businesses are rapidly transitioning from traditional payment methods to digital payments. Digital transactions volume has increased significantly over the past year as foot traffic at retail bank branches, for example, has decreased markedly. Moreover, surging unemployment has pushed many people to take up contractual/freelancing work, sourced globally, driving a substantial rise in international digital transactions volume.

This trend will likely continue this year, as organizations and employees continue to embrace remote organizational structures. According to Statista, total transaction value in the digital payments segment is expected to hit $6.69 trillion this year.

The fintech industry has been capitalizing on the remote-transaction wave since the onset of the COVID-19 pandemic. Relatively lesser-known financial services firms have increased their loan rates and fees  for small- and medium-sized enterprises (SMEs) amid the pandemic, thereby boosting their interest earnings. But with a gradual economic recovery allowing SMEs to resume their operations in full, and with that a rise in their demand for working capital credit, fintech companies’ loan closure earnings should rise.

As such, we think fintech companies such as Intuit, Inc. (INTU), 360 Digitech, Inc. (QFIN) and Synchrony Financial (SYF) are positioned to thrive.

Intuit, Inc. (INTU)

INTU delivers  business, financial management and accounting services to companies and  accountants based in the United States and Canada. It operates through three segments – small business, consumer tax and ProConnect. The company’s proprietary services include QuickBooks financial and business management processing software, payroll solutions, and TurboTax products and services.

In December, INTU acquired consumer technology platform Credit Karma to create a new consumer finance platform aimed at promoting financial independence. The acquisition gives INTU direct access to Credit Karma’s 110 million-strong customer base, allowing the former to increase its market reach seamlessly. The company launched its TurboTax solutions in Spanish yesterday, to appeal to the Latinx community, thereby bolstering its potential clientele base.

Earlier this month, INTU upgraded its Mint website and launched an iOS app, following the increasing popularity of the site. With several noteworthy features, INTU’s Mint is on track to become a leading financial website globally.

INTU’s revenues have increased 14% year-over-year to $1.32 billion in the fiscal first quarter ended October 31, 2020. Its non-GAAP operating income has risen 159% from its  year-ago value to $334 million, while its net income grew 247.4% from the prior-year quarter to $198 million. Its EPS rose 241% from the same period last year to $0.75.

A consensus EPS estimate of $1.28 for the fiscal second quarter ended January 31, 2021 Represents  a 10.3% rise year-over-year. Moreover, INTU surpassed the Street’s EPS estimates in three of the trailing four quarters, which is impressive. Analysts expect the company’s revenues to rise 15.2% in the about-to-be reported quarter to $1.95 billion.

INTU has gained more than 110% to hit its 52-week high of $398.12 in January, since hitting its 52-week low of $187.68 in March. Currently trading at $380.15, analysts expect INTU to hit $416.38 soon, representing a potential upside of 8.4%.

INTU’s POWR Ratings reflect this promising outlook. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system. INTU has a grade of A for both Quality and Sentiment, and B for Momentum. It is currently ranked #2 of 48 stocks in the Consumer Financial Services industry.

In addition to the POWR Ratings grades I have just highlighted, you can see the INTU ratings for Growth, Value, Stability, and Sentiment.

360 Digitech, Inc. (QFIN)

Based in China, QFIN is a data-driven consumer finance platform, designed to provide management services through Software-as-a-Service modules. Its core platform is a digitally empowered, unsecured credit line for individual borrowers that have a proven credit history. The company has longstanding partnerships with banks and financial institutions, allowing it to operate as a comprehensive tech platform supporting credit transactions from application to settlement.

QFIN’s proprietary technology has been lauded for its automated identification process, which allows it to reduce losses accruing from credit fraud significantly. Its enhanced risk management and value proposition has allowed its funding partners to benefit from repeat lending and cross-selling opportunities.

QFIN’s total loan origination volume has increased 17.9% year-over-year to RMB66 billion in the third quarter ended September 30, 2020. Its loan origination volume under the capital light model within its Platform services has increased 48.7% from the year-ago value of RMB16.91 billion. And its registered users have risen 23.8% versus the same period last year to 155.96 million.

A consensus EPS estimate of $7.53 for the current quarter ending March 31, 2021 represents  a 3037.5% rise year-over-year. QFIN has an impressive earnings surprise history; it beat the Street’s EPS estimates in three of the trailing four quarters. Analysts expect the company’s revenues to increase 921.9% in fiscal 2020, and 7.7% in the current year.

QFIN has gained 207.7% to hit its 52-week high of $19.60 yesterday, since hitting its 52-week low of $6.37 in March last year. Analysts expect QFIN to hit $133.24 in the near term representing  a potential upside of 619.8%.

QFIN has an overall rating of B, which equates to Buy in our POWR Ratings system. It has a grade of A for Sentiment, and a B for both Value and Quality. It is currently ranked #4 in the same industry.

You can check out the additional POWR Ratings for QFIN (Growth, Momentum and Stability) here.

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

Synchrony Financial (SYF)

SYF is a consumer financial services company offering a variety of credit services and deposit products. Its credit services include credit cards and consumer and commercial installment loans. The company’s deposit segment is covered  by the Federal Deposit Insurance Corporation. Its main deposit offerings include certificates of deposit, individual retirement accounts, money market and savings accounts.

In January , Walgreens partnered with SYF to provide additional cashback and other offers under its customer loyalty program myWalgreens. Moreover, the company collaborated with RevSpring’s payment gateway to facilitate hassle free credit card bill payments through revSpring’s proprietary payment processing portal PersonaPay.

SYF’s retailer share arrangements earnings have increased 2% year-over-year to $1 billion for the fourth quarter ended December 31, 2020. Its net earnings have risen slightly from the same period last year to $738 million, and its  EPS has increased 8.7% from the year-ago value to $1.25.

A consensus EPS estimate of $1.19 for the current quarter ending March 31, 2021 represents  a 164.4% rise year-over-year. The consensus revenue estimate of $14.88 billion for fiscal 2021 represents  a 3.3% improvement from the same period last year.

SYF has gained more than 195% since hitting its 52-week low of $12.15 in March last year. the stock hit its 52-week high of $40.69 on January 20. Analysts expect SYF to hit $45.11 soon, representing a potential upside of 25.2%.

It is no surprise that SYF has an overall rating of B, equating to Buy in our POWR Ratings system. It has a grade of B for both Sentiment and Quality. Moreover, the stock is ranked #5 in the same industry.

Click here to view the additional SYF POWR Ratings for Growth, Momentum, stability and Value.

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

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INTU shares were trading at $386.02 per share on Thursday afternoon, up $5.87 (+1.54%). Year-to-date, INTU has gained 1.79%, versus a 2.88% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...

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