Fears of rising inflation and a possible recession resulted in a massive stock market sell-off in recent months, causing fintech stocks to plunge significantly. However, the industry has tremendous growth potential due to rapid technological advancements and increasing demand for digital transactions.
Furthermore, an increasing number of collaborations between national regulators and financial institutions, as well as the use of modern technology by a number of financial organizations to deliver integrated and value-added services to customers, are important drivers of the fintech sector.
The global fintech market is expected to reach $16652680 million by 2028, registering a CAGR of 13.9%.
Given this backdrop, we think it might be wise to scoop up the shares of fundamentally sound fintech company Visa Inc. (V) and Regional Management Corp. (RM) and take advantage of the growing industry trend.
Visa Inc. (V)
V is a global payment technology company. The company enables digital payments between customers, merchants, financial institutions, companies, strategic partners and public entities.
V’s net revenue increased 18.7% from the prior-year value to $7.28 billion for the third quarter ended June 30, 2022. operating income grew 2.1% year over year to $4.15 billion. The company’s net income increased by 32.5% from the previous quarter to $3.41 billion, while EPS was $1.60.
Analysts expect EPS to grow 21.3% year-over-year to $7.17 in fiscal 2022. The consensus revenue estimate of $29.02 billion in fiscal 2022 represents an increase of 20.4% from the same period last year. The share has risen 8.4 per cent in the past year.
V’s POWR Ratings reflects this promising view. The company has an overall rating of B, which means Buy in our proprietary rating system. POWR Ratings evaluates stocks based on 118 different factors, each with its own weighting.
V also rated B for stability, quality and sentiment. Within Consumer Financial Services industry, it is ranked number 8 out of 48 stocks. click here to see additional POWR ratings for value, momentum and growth for V.
Regional Management Corp. (RM)
RM, a diversified consumer finance firm, offers a broad range of installment loan products primarily to customers in the United States who have limited access to consumer credit from banks, thrifts, credit card companies and other lenders. It provides small and large installment loans, as well as retail loans to help with the purchase of furniture, white goods and other retail items.
In June, with the inauguration of its first branch in Merrillville, RM announced the expansion of operations into Indiana, its 15th US state. The new position strengthens Regional Management’s de novo foothold in the Midwestern United States. “We are very excited to bring to Indiana our suite of affordable financial solutions for hard-working Hoosiers,” said Robert W. Beck, president and CEO of RM.
For the first quarter ended March 31, 2022, RM’s total revenue increased 23.7% to $120.85 million from the prior year. Cash and cash equivalents grew 144% year over year to $17.64 million. The company’s net income increased 4.9% from the prior quarter to $26.78 million, while EPS increased 15.6% from the prior year to $2.67.
RM’s EPS is expected to grow at a rate of 24% per year over the next five years. The consensus revenue estimate of $504.01 million in fiscal 2022 represents an increase of 17.7% from the same period last year. The share has risen 7.8 per cent in the past year.
It’s no surprise that RM has an overall B rating, which equates to a Buy in our POWR rating system. The share also has a B grade for stability, value and quality. Within the Consumer Financial Services industry, it is ranked number 2.
Beyond the POWR Ratings I just highlighted, you can see RM Ratings for Momentum, Growth and Sentiment.
The V share fell $2.91 (-1.37%) in pre-market trading on Monday. So far this year, V has fallen -3.14%, against an increase of -13.15% in the benchmark S&P 500 over the same period.
About the Author: Pragya Pandey
Pragya is a stock analyst and financial journalist with a passion for investing. In college, she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More…