The fintech sector is booming with technological advancements and the growing use of new financial solutions. Fintech companies are innovating rapidly, driven by artificial intelligence and integrated financial trends. With the rise of mobile financial apps, consumers can manage various financial activities on the go, setting fintech up to replace many traditional banking processes.

Despite regulatory challenges and cybersecurity risks, strong innovation and security measures in financial technology present compelling investment opportunities. Therefore, investing in leading consumer financial technology stocks like PayPal Holdings, Inc. (PYPL), NerdWallet, Inc. (NRDS) and Qifu Technology, Inc. (QFIN) might be wise.

Consumer financial services have been revolutionized by digital access and fintech innovations such as robo-advisors, BNPL and BaaS. People are increasingly trusting neobanks and fintech companies for their customer experience, using Big Data and AI for personalized services. As a result, fintech is expected to grow significantly and disrupt 28% of traditional banking services by 2027.

This year, the fintech market is expected to surpass $340 billion and is expected to nearly quadruple $1.15 trillion by 2032with a CAGR of 16.5%. This growth is driven by strong spending, as financial technology simplifies lending, savings, deposits, bill payments and money transfers. Additionally, it is estimated that 87.4% of all transactions in the United States will be cashless by 2024, further disrupting the traditional banking system.

Considering these favorable trends, let’s analyze the fundamental aspects of the three Consumer Financial Services chooses, starting from the third choice.

Stock #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 May 29, 2024, PYPL announced that its stablecoin, PayPal USD (PYUSD), is now available on the Solana blockchain, offering faster and cheaper transactions for users. Crypto.com, Phantom, and Paxos are among the first to provide on-ramps for using PYUSD on Solana.

In terms of trailing 12-month leveraged FCF margin, PYPL’s 21.37% is 22.7% higher than the industry average of 17.42%. Its trailing 12-month Return on Total Assets of 5.21% is 388.9% higher than the industry average of 1.06%. Furthermore, its trailing 12-month Return on Total Assets of 21.40% Return on Common Equity is 100.7% higher than the industry average of 10.69%.

For the first quarter ended March 31, 2024, PYPL’s net revenue increased 9.4% year-over-year to $7.70 billion. Its non-GAAP operating income increased 14.7% year-over-year to $1.40 billion.

The company’s non-GAAP net income and non-GAAP earnings per share were $1.16 billion and $1.08 billion, up 20.4% and 27.1%, respectively, year over year. Additionally, the company’s free cash flow was $1.76 billion, up 76.3% from the prior-year quarter.

For the quarter ended June 30, 2024, PYPL’s revenue is expected to increase 7.2% year-over-year to $7.81 billion. Its EPS for fiscal 2025 is expected to increase 10.3% year-over-year to $4.58. It has beaten Street revenue estimates in each of the previous four quarters. Over the past nine months, the stock has gained 8.3% to close the latest trading session at $59.33.

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

It has a B Sentiment rating. It is ranked 18th out of 45 stocks in the Consumer Financial Services sector. To see 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-facing personal finance advice, 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 51.9% higher than the industry average of 59.78%. Similarly, its trailing 12-month asset turnover ratio of 1.32x is 510.4% higher than the industry average of 0.22x.

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

Street expects NRDS’s revenue for the quarter ended June 30, 2024, to increase 4.6% year-over-year to $149.85 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 106.2% to close the latest trading session at $15.03.

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

It has a B grade for Quality. In the same sector, it is ranked 10th. 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, People’s Republic of China, QFIN and its subsidiaries operate a credit-tech platform under the brand name 360 ​​Jietiao in the People’s Republic of China. It provides credit-based services and platform services.

In terms of trailing-12-month EBITDA margin, QFIN’s 47.36% is 107.3% higher than the industry average of 22.84%. Its trailing-12-month net income margin of 26.81% is 15.8% higher than the industry average of 23.15%. Additionally, its trailing-12-month asset turnover ratio of 0.38x is 76.8% 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-on-year to RMB4.15 billion ($570.66 million). Its non-GAAP income from operations increased 33.7% from the prior-year quarter to RMB1.41 billion ($193.89 million).

In the same quarter, the Company’s non-GAAP net income attributable to QFIN shareholders and non-GAAP net income per ADS attributable to QFIN ordinary shareholders were RMB1.21 (US$166.39 million) and RMB7.58, respectively, up 23.3% and 28% from the previous year.

Analysts expect QFIN’s EPS for fiscal 2024 to increase 10.5% year-over-year to $4.19. Its revenue for fiscal 2025 is expected to increase 5.2% year-over-year to $2.35 billion. QFIN shares have gained 35.1% over the past nine months, closing the latest trading session at $19.24.

QFIN’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.

It is ranked #3 in the Consumer Financial Services sector. It has a B grade for value and quality. To access QFIN’s grades for growth, momentum, stability and sentiment, Click here.

What to do next?

Get this special report featuring 3 low-priced companies with huge upside potential even in today’s volatile markets:

3 stocks that will DOUBLE this year >

PYPL stock was trading at $60.53 a share on Monday afternoon, up $1.20 (+2.02%). Year-to-date, PYPL is down -1.43%, compared to a 17.55% gain in the benchmark S&P 500 index over the same period.

About the Author: Abhishek Bhuyan

Abhishek started his career as a financial journalist because he is very interested in identifying the fundamental factors that influence the future performance of financial instruments. Moreover…

More resources for actions in this article

Source