The popularity of fintech has grown exponentially over the past year, owing mainly to the remote lifestyle. Also, as people increasingly turn to cryptocurrencies, blockchains, and mobile banking, fintech is expected to thrive. Studies show that 88% of U.S. consumers are now using fintech to some degree.
Fintech financing was up 147% year-over-year in the third quarter of 2021, according to a CB Insights research report. Furthermore, as of October 2021, year-to-date fintech funding had already surpassed the 2020 levels. Investors’ interest has also been growing in the fintech sector due to its payment innovations.
Given the industry’s solid growth prospects, we think fundamentally strong fintech stocks Sapiens International Corporation N.V. (SPNS), Mitek Systems, Inc. (MITK), and QIWI plc (QIWI) could be quality additions to one’s portfolio now.
Sapiens International Corporation N.V. (SPNS)
SPNS provides software solutions for the insurance and financial services industries, operating in various continents. The company’s offerings include Sapiens CoreSuite and Sapiens IDITSuite for personal commercial and specialty uses and worker’s compensation. It is headquartered in Holon, Israel.
On November 2, SPNS was chosen as a leader in the 2021 Gartner Magic Quadrant for Life Insurance Policy Administration Systems, Europe, for its vision and ability to execute. Regarding this recognition, Roni Al-Dor, President and CEO, SPNS, said, “We are once again honored to be named as a Leader in the 2021 Gartner Magic Quadrant report. We believe Sapiens CoreSuite and comprehensive managed services, as well as our deep understanding of the changes reshaping the insurance industry, have positioned us to empower our customers to address their current and future needs.”
On November 1, SPNS announced that a $1 billion carrier serving company, Guardian Group, will implement SPNS’ solutions for its underwriting in Guardian’s life and health operations in Trinidad, Jamaica, and Curacao. This demonstrates SPNS’ expertise in this domain.
For the fiscal third quarter, ended September 30, SPNS’ non-GAAP revenue increased 20.9% year-over-year to $118.44 million. Its non-GAAP operating income rose 17.7% from the prior-year quarter to $21.02 million. And its non-GAAP net income and non-GAAP EPS improved 23.5% and 14.8%, respectively, from the same period last year to $16.98 million and $0.31.
The $030 consensus EPS estimate for the current quarter (ending December 2021) indicates an 11.1% year-over-year increase. Likewise, the $120.48 million consensus revenue estimate for the current quarter reflects a 17% improvement from the prior-year quarter. Also, SPNS has an impressive surprise earnings history; it has topped consensus EPS estimates in three out of the trailing four quarters.
The stock has gained 27.4% in price over the past year and 36% over the past three months to close yesterday’s trading session at $37.88.
SPNS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
SPNS has a Momentum grade of A, and a Growth, Stability, and Sentiment grade of B. In the 59-stock Software – Business industry, it is ranked #9. Click here to see the additional POWR Ratings for SPNS (Value and Quality).
Mitek Systems, Inc. (MITK)
MITK develops and sells mobile image capture and digital identity verification solutions internationally. The San Diego, Calif., company offers fraud detection, reduction, and compliant transaction services and enables individuals and businesses to deposit checks using their gadgets remotely.
On November 2, MITK subsidiary, ID R&D, a provider of AI-based voice and face biometrics, made its IDVoice® product available to French voice recognition services provider, Vivoka, in its Voice Development Kit (VDK). This should add to MITK’s revenue stream.
And on October 25, MITK unveiled its new offering, IDLive Doc, a document liveness detector. This new fraud-fighting technology is expected to benefit the company by addressing issues of multiple consumers.
MITK’s total revenue increased 8.6% year-over-year to $33.27 million in its fourth fiscal quarter, ended September 30. This can be attributed to a 22.3% rise in revenues from services and others from the same period last year to $15.49 million. Its software and hardware services cost of revenue decreased 75.1% from the prior-year quarter to $0.26 million.
Analysts expect MITK’s EPS to improve 17.1% year-over-year to $0.89 in the current year (fiscal 2022). The Street expects its revenue to increase 15.4% from the prior year to $138.20 million. MITK has an impressive surprise earnings history too; it has beaten consensus EPS estimates in each of the trailing four quarters.
MITK’s stock has gained 48.2% in price over the past year to close yesterday’s trading session at $17.92. It has gained 7.8% over the past six months.
It is no surprise that MITK has an overall B rating, which translates to Buy in our POWR Ratings system. The stock has a B grade for Growth, Value, and Quality. It is ranked #25 of the 165 stocks in the Software – Application industry.
To see the additional POWR Ratings for Momentum, Stability, and Sentiment for MITK, click here.
QIWI plc (QIWI)
QIWI and its subsidiaries operate electronic online payment systems in Russia and globally. The company, which is based in Nicosia, Cyprus, functions through Payment Services; Consumer Financial Services; and Rocketbank segments, offering payment services across online, mobile, and physical channels.
On September 16, QIWI announced that it had completed the sale of its 40% stake in JSC Tochka to Bank Otkritie Financial Corporation PJSC for RUB4.95 billion ($67.88 million). The deal is expected to deliver at least a 2.5x return on QIWI’s total investment.
For its fiscal second quarter, ended June 30, QIWI’s revenue increased 14.7% year-over-year to $149.40 million. Its net profit improved 43.3% from the same period last year to $36.40 million, and its EPS attributable to ordinary equity holders of the parent came in at $0.58, up 43.9% from the prior-year quarter.
QIWI has beaten consensus EPS estimates in each of the trailing four quarters, which is impressive. Analysts expect EPS to come in at $1.86 for the current year (fiscal 2021).
The stock has declined 4.6% in price over the past five days to close yesterday’s trading session at $8.39.
QIWI has a B grade for Value, Momentum, and Sentiment. It is ranked #4 out of 13 in the Foreign Consumer Finance industry.
In addition to the POWR Rating grades we have stated above, one can see QIWI ratings for Growth, Stability, and Quality here.
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SPNS shares were trading at $38.15 per share on Friday afternoon, up $0.27 (+0.73%). Year-to-date, SPNS has gained 25.70%, versus a 27.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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