The consumer financial services sector is booming thanks to digital access and the rise of fintech. Fintech companies focus on customer experience, using Big Data and AI to offer personalized services. People increasingly trust neobanks and the fintech market presence is expected to grow significantly in the near future.

Therefore, as FinTech disrupts banking, it may be wise to buy fundamentally strong consumer fintech stocks like PayPal Holdings, Inc. (PYPL), NerdWallet, Inc. (NRDS) and Qifu Technology, Inc. (QFIN), which are currently a bargain.

Fintech companies benefit from resilient spending, revenue increases and high interest rates. They focus on using technology to develop specialized financial products, such as lending and savings services, and simplify deposits, bill payments and money transfers. In particular, in the United States, an estimate 87.4% of all transactions will be cashless in 2024.

As a result, mobile apps now allow users to manage various financial tasks on the go. As a result, FinTech is set to replace many traditional banking processes. Robo-advisors offer automated financial advice, revolutionizing traditional advisory services. It is expected that by 2027 FinTech will be able to do this stop more than 28% of traditional banking services.

Furthermore, this year, the fintech market will surpass 340 billion dollarsand by 2032 it will nearly quadruple to $1.15 trillion, with a remarkable CAGR of 16.5%. This growth will drive the emergence of new fintech and banking sectors. Furthermore, the global financial services market is expected to grow to $33.31 trillion by 2026 and $45.15 trillion by 2031, with CAGR of 7.4% and 6.3%respectively.

Considering these favorable trends, let’s analyze the fundamental aspects of the three Consumer financial services choices, starting from the third choice.

Action no. 3: PayPal Holdings, Inc. (PYPL)

PYPL operates a technology platform that enables digital payments on behalf of merchants and consumers around the world. It operates a large-scale two-sided network that connects merchants and consumers, allowing its customers to connect, transact, and send and receive payments both online and in person.

On June 11, 2024, PYPL announced that PayPal USD (PYUSD) is now available on the Solana blockchain, offering faster and cheaper transactions for consumers. This integration aims to improve digital commerce by leveraging Solana’s high-speed, low-cost transaction capabilities.

On March 17, 2024, PYPL announced that Tap to Pay on iPhone is now available to all Venmo business profiles and PayPal Zettle users in the United States, allowing them to accept contactless card and digital wallet payments directly on their iPhones without additional hardware . This new feature aims to help small businesses adapt to cashless trends and simplify payment processing.

In terms of leveraged FCF margin over the past 12 months, PYPL’s 21.37% is 22.4% higher than the industry average of 17.47%. Its trailing 12-month return on total assets of 5.21% is 390.8% higher than the industry average of 1.06%. Furthermore, it is 21.40% over the past 12 months Return on common capital is 101.3% higher than the industry average of 10.63%.

For the first quarter ended March 31, 2024, PYPL’s net revenues increased 9.4% year over year to $7.70 billion. Its non-GAAP operating profit grew 14.7% from a year ago to $1.40 billion.

The company’s non-GAAP net income and non-GAAP EPS were $1.16 billion and $1.08, up 20.4% and 27.1% year over year, respectively. Additionally, the company’s free cash flow stood at $1.76 billion, an increase of 76.3% from the prior-year quarter.

For the quarter ending June 30, 2024, PYPL’s revenue is expected to increase 6.9% year-over-year to $7.79 billion. Its EPS for fiscal 2025 is expected to increase 10.6% year-over-year to $4.56. It topped Street revenue estimates in three of the trailing four quarters. Over the past six months, the stock gained 8.1% to close the latest trading session at $64.77.

PYPL’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, equivalent to a Buy in our proprietary rating system. POWR Ratings evaluate stocks based on 118 different factors, each with their own weight.

It has a B grade for Sentiment. She ranks 18th out of 44 B-rated stocks Consumer financial services industry. To view PYPL’s growth, value, momentum, stability and quality ratings, Click here.

Action no. 2: NerdWallet, Inc. (NRDS)

NRDS operates a digital platform that provides consumer-focused advice on personal finance by connecting individuals and small and medium-sized businesses with financial product providers in the United States, United Kingdom, Australia and Canada.

In terms of trailing 12-month gross profit margin, NRDS’s 90.81% is 53% higher than the industry average of 59.34%. Likewise, its trailing 12-month asset turnover ratio stands at 1.32x and is 508.8% higher than the industry average of 0.22x.

For the fiscal first quarter ended March 31, 2024, NRDS reported revenue of $161.90 million. Its non-GAAP operating profit increased 178.9% year over year to $10.60 million. Its adjusted EBITDA was $25.50 million, up 22% year over year. Furthermore, the company’s cash and cash equivalents of $110.90 million indicates an increase of 10% compared to the same period in the previous year.

Street expects NRDS’ revenue for the quarter ending June 30, 2024 to increase 4.7% year-over-year to $149.97 million. Its EPS for fiscal 2025 is expected to grow 111.5% year over year to $0.48. Over the past nine months, the stock has gained 65.5% to close the latest trading session at $13.21.

Not surprisingly, NRDS has an overall rating of B, which translates to Buy in our proprietary rating system.

It has a B grade quality. Within the same sector, it is ranked no. 8. In addition to the above, we have also assigned NRDS grades for growth, value, momentum, stability and sentiment. Get all NRDS ratings Here.

Stock no. 1: Qifu Technology, Inc. (QFIN)

Headquartered in Shanghai, PRC, QFIN and its subsidiaries operate a credit technology platform under the 360 ​​Jietiao brand in the PRC. It provides credit-based services and platform services.

In terms of trailing 12-month EBITDA margin, QFIN’s 47.36% is 109.3% higher than the industry average of 22.63%. Its trailing 12-month net income margin of 26.81% is 16.4% higher than the industry average of 23.04%. Additionally, its trailing 12-month asset turnover ratio stands at 0.38x and is 76.3% higher than the industry average of 0.22x.

QFIN’s total net revenue for the first quarter ended March 31, 2024 increased 15.4% year-over-year to RMB4.15 billion ($572.35 million). Its non-GAAP operating income increased 33.7% from the prior-year quarter to RMB1.41 billion ($194.46 million).

For the same quarter, non-GAAP net income attributable to QFIN shareholders and non-GAAP net income per ADS attributable to QFIN common shareholders were RMB 1.21 ($166.88 million) and 7, respectively. ,58 RMB, up 23.3% and 28% year-on-year.

Analysts expect QFIN’s EPS for fiscal 2024 to increase 12.5% ​​year over year to $4.27. Its revenue for fiscal 2025 is expected to increase 8.1% year-over-year to $2.45 billion. QFIN shares gained 37.5% over the past six months to close the latest trading session at $20.12.

QFIN’s strong fundamentals are reflected in its POWR ratings. It has an overall rating of A, equivalent to Strong Buy in our proprietary rating system.

It is ranked #2 in the Consumer Financial Services industry. It has a B grade for value and quality. To access QFIN ratings for Growth, Momentum, Stability and Sentiment, Click here.

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PYPL shares traded at $62.93 per share on Wednesday afternoon, down $1.84 (-2.84%). Year to date, PYPL has gained 2.48%, compared to a 14.13% gain in the benchmark S&P 500 index over the same period.

About the Author: Abhishek Bhuyan

Abhishek embarked on his career path as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments. Moreover…

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