Fears over rising inflation are motivating investors to rotate away from fintech stocks that gained significantly amid the pandemic with a huge surge in remote financial transactions. This is evidenced by Global X FinTech ETF’s (FINX) 6.1% loss over the past three months compared to the SPDR S&P 500 Trust ETF’s (SPY) 8.3% returns.
However, the industry holds immense growth potential in today’s digital era, which demands financial transactions be smarter and quicker. According to a Research and Markets report, the Global Fintech Market is expected to grow at a 23.6% CAGR between 2020 – 2025.
World Acceptance Corporation (WRLD)
WRLD is in the small-loan consumer finance business. It has a $1.11 billion market capitalization and operates 1,243 branches. The company offers short-term small installment loans, medium-term larger installment loans, related credit insurance, and ancillary products and services. In addition, it provides automobile club memberships to its borrowers, and income tax return preparation and electronic filing services.
WRLD’s total expenses decreased 34.3% year-over-year to $90 million in the fourth quarter, ended March 31, 2021. Its income before taxes grew 116.3% year-over-year to $56.29 million. Its net income came in at $44.88 million, which represents a 92.6% year-over-year increase. The company’s EPS was $6.96, up 118.9% year-over-year.
Its revenue is expected to increase 6.7% year-over-year to $567.03 million for 2023. It surpassed consensus EPS estimates in each of the trailing four quarters. The stock has surged 145.4% over the past year to close yesterday’s trading session at $163.20.
WRLD’s 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 assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Quality, and a B grade for Value and Momentum. We have also graded WRLD for Growth, Sentiment and Stability. Click here to access all WRLD’s ratings. WRLD is ranked #11 of 51 stocks in the Consumer Financial Services industry.
CPI Card Group Inc. (PMTS)
With a market capitalization of $207.76 million, PMTS, together with its subsidiaries, engages in the design, production, data personalization, packaging, and fulfillment of financial payment cards. It operates through two segments: Debit and Credit, and Prepaid Debit. Its products include EMV and non-EMV financial payment cards and metal cards.
PMTS’ net sales increased 20.4% year-over-year to $89.09 million in the first quarter, ended March 31, 2021. Its income from operations grew 136.9% year-over-year to $17.77 million. Its net income came in at $2.41 million, which represents a 37.2% year-over-year increase. The company’s EPS was $0.21, up 31.2% year-over-year.
Its EPS is expected to grow at a 13% rate per annum over the next five years. The stock has soared 1,270.4% over the past year to close yesterday’s trading session at $18.50.
PMTS’ POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary ratings system. The stock has a B grade for Momentum, Value and Quality.
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WRLD shares were unchanged in after-hours trading Wednesday. Year-to-date, WRLD has gained 59.20%, versus a 12.79% 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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