Fintech, which is short for financial technology, is a technology that helps consumers or financial institutions provide and deliver financial services in more efficient and quicker ways than what has traditionally been available.
In the past year, the fintech industry has seen impressive growth. The Global X FinTech ETF (FINX) has outperformed the S&P 500 and is up more than 43% over the past 12 months.
Though large stocks, such as PayPal (PYPL) and Square (SQ), garner most of the attention in the fintech industry, there are other smaller companies in the space worth paying attention to. Today, I will analyze two fintech companies, SS&C Technologies Holdings Inc. (SSNC) and StoneCo (STNE), to see which is currently a better buy.
SS&C Technologies Holdings Inc. (SSNC)
SSNC provides software used for financial and investment management. The company is 100% focused on serving businesses in the financial industry. SSNC’s specialized software and related services include software as a service (SaaS). SSNC’s clients include pension funds, insurance providers, institutional asset managers, banks, credit unions, real estate property managers, commercial lenders, and more.
Based in Windsor, CT, SSNC has locations throughout North America, Asia, Europe, and even Australia. SSNC has an overall grade of A and a Strong Buy rating in the POWR Ratings system. The stock has grades of B in the Value, Growth, Momentum, and Quality components. To learn how SSNC grades in the Stability and Sentiment components, click here.
SNCC is ranked second out of 59 stocks in the Software – Business industry. You can find other top stocks in this industry by clicking here. Analysts believe good things are in store for SSNC. The average analyst target price for the stock is $84.83, which is currently 17% higher than where it’s currently trading. SNCC seems to be trading at a reasonable value as the stock’s forward P/E ratio of 15.75.
SSNC has momentum heading into the summer as the company is fresh off a first-quarter earnings report that topped revenue estimates. The company reported $1.18 per share. This figure is a significant leap above the $1.03 SNCC reported in the same quarter last year.
STNE provides fintech solutions. STNE’s cloud-based tech platform is end-to-end, providing an easy way for businesses to conduct e-commerce through traditional computers and mobile computing devices. Based in beautiful Sao Paulo, Brazil, STNE has a forward P/E ratio of 79.89, which means the stock is very overpriced.
STNE is not for the faint of heart. The stock has a 2.30 beta, which indicates it has more than twice the volatility of the market. STNE is also a POWR Ratings dud with an overall grade of D, translating into a Sell rating. The stock has a Value Grade of F and a grade of C in the Stability and Growth components.
Click here to find out how STNE fares in the rest (Momentum, Sentiment, and Quality) of its POWR grades. Of the 102 stocks in the Financial Services industry, STNE is ranked 97th. You can find the top stocks in this industry by clicking here.
Which is the Better Buy?
SSNC is currently the better buy. SSNC has a much more attractive valuation, and the stock has positive momentum in 2021, trading just about 5% away from its all-time high. SSNC is also highly ranked in its industry.
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SSNC shares were unchanged in after-hours trading Wednesday. Year-to-date, SSNC has declined -0.50%, versus a 15.24% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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