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Reasons to Retain Affirm (AFRM) Stock in Your Portfolio
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Affirm Holdings, Inc. (AFRM - Free Report) exhibits strong growth potential, driven by increasing active merchant numbers, a flourishing buy now, pay later (BNPL) landscape and a rising Gross Merchandise Volume (GMV). The company's robust transaction volumes and interest income contribute significantly to its positive outlook. The stock has experienced an impressive 90.5% surge in the past six months, surpassing the industry average of 7.3%.
Affirm — with a market cap of almost $10.7 billion — is a platform for digital and mobile-first commerce that offers financial products. This company presently carries a Zacks Rank #3 (Hold).
Let’s delve deeper.
The Zacks Consensus Estimate for AFRM’s current-year earnings indicates a 26.7% year-over-year improvement. Affirm beat on earnings in two of the last four quarters and missed twice. This is depicted in the graph below.
The company expects to reach a significant milestone by achieving full fiscal year 2024 profitability on an adjusted operating income basis. The adjusted operating margin is anticipated to surpass 11% for fiscal 2024, highlighting a massive improvement from a year ago.
Fiscal 2024 revenues, as a percentage of GMV, are expected to expand 65 bps from the fiscal 2023 level.The consensus mark for current-year revenues is pegged at nearly $2.2 billion, suggesting a 37.3% rise from the prior year’s reported number. The anticipated growth should be supported by increasing GMV and transaction volumes. Management is optimistic about achieving a fiscal 2024 GMV surpassing $25.25 billion, implying notable growth from the previous year's $20.2 billion.
A report on BNPL trends from Adobe Analytics showed that in November 2023, purchases made with BNPL services fueled online spending. The deferred payment financial service is playing a major role in consumer spending resilience observed in recent times. AFRM is expected to continue riding this momentum in the coming days. Moreover, partnerships with renowned firms like Evolve, Walmart, Liberty Travel etc., are expected to bolster its presence and aid in improved metrics for active merchants, gross merchandise value, and transactions.
Disciplined performance in recent quarters has become a catalyst for Affirm's network growth. Per the Zacks Consensus Estimate, AFRM is poised for robust 26.8% year-over-year growth in merchant network revenues for the current year. Additionally, the consensus projection for card network revenues in the same period anticipates a significant 25.4% increase compared with the previous year.
Affirm continues to benefit from a high interest environment, contributing to its positive top-line performance. In the preceding year, the interest income metric surged by an impressive 29.8%, reaching $685.2 million. The Zacks Consensus Estimate for the current year reinforces this trend, indicating a 67.6% year-over-year upswing in interest income.
Key Risks
However, there are a few factors that investors should keep an eye on. Growing competition in the BNPL sector, higher funding costs and increasing regulations driven by factors like high interest rates and limited consumer loan demand in the secondary market pose challenges to Affirm's growth. Nevertheless, we believe that a systematic and strategic plan of action will drive its performance in the long term.
The bottom line of SPX Technologies outpaced estimates in three of the last four quarters and matched the mark once, the average beat being 23.19%. The Zacks Consensus Estimate for SPXC’s 2024 earnings suggests an improvement of 16.7% from the 2023 reported figure. The consensus mark for revenues suggests growth of 13.1% from the 2023 figure. The consensus mark for SPXC’s 2024 earnings has moved 5.5% north in the past 60 days.
CRA International’s earnings outpaced estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 8.06%. The Zacks Consensus Estimate for CRAI’s 2024 earnings suggests an improvement of 5.1% from the 2023 reported figure. The consensus mark for revenues suggests growth of 4.8% from the 2023 figure. The consensus mark for CRAI’s 2024 earnings has moved 6.9% north in the past 30 days.
The bottom line of Barrett Business Services outpaced estimates in each of the last four quarters, the average beat being 77.67%. The Zacks Consensus Estimate for BBSI’s 2024 earnings suggests an improvement of 5.3% from the 2023 reported figure. The same for revenues suggests growth of 6.8% from the 2023 number. The consensus mark for BBSI’s 2024 earnings has moved 1.4% north in the past 30 days.
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Reasons to Retain Affirm (AFRM) Stock in Your Portfolio
Affirm Holdings, Inc. (AFRM - Free Report) exhibits strong growth potential, driven by increasing active merchant numbers, a flourishing buy now, pay later (BNPL) landscape and a rising Gross Merchandise Volume (GMV). The company's robust transaction volumes and interest income contribute significantly to its positive outlook. The stock has experienced an impressive 90.5% surge in the past six months, surpassing the industry average of 7.3%.
Affirm — with a market cap of almost $10.7 billion — is a platform for digital and mobile-first commerce that offers financial products. This company presently carries a Zacks Rank #3 (Hold).
Let’s delve deeper.
The Zacks Consensus Estimate for AFRM’s current-year earnings indicates a 26.7% year-over-year improvement. Affirm beat on earnings in two of the last four quarters and missed twice. This is depicted in the graph below.
Affirm Holdings, Inc. Price and EPS Surprise
Affirm Holdings, Inc. price-eps-surprise | Affirm Holdings, Inc. Quote
The company expects to reach a significant milestone by achieving full fiscal year 2024 profitability on an adjusted operating income basis. The adjusted operating margin is anticipated to surpass 11% for fiscal 2024, highlighting a massive improvement from a year ago.
Fiscal 2024 revenues, as a percentage of GMV, are expected to expand 65 bps from the fiscal 2023 level.The consensus mark for current-year revenues is pegged at nearly $2.2 billion, suggesting a 37.3% rise from the prior year’s reported number. The anticipated growth should be supported by increasing GMV and transaction volumes. Management is optimistic about achieving a fiscal 2024 GMV surpassing $25.25 billion, implying notable growth from the previous year's $20.2 billion.
A report on BNPL trends from Adobe Analytics showed that in November 2023, purchases made with BNPL services fueled online spending. The deferred payment financial service is playing a major role in consumer spending resilience observed in recent times. AFRM is expected to continue riding this momentum in the coming days. Moreover, partnerships with renowned firms like Evolve, Walmart, Liberty Travel etc., are expected to bolster its presence and aid in improved metrics for active merchants, gross merchandise value, and transactions.
Disciplined performance in recent quarters has become a catalyst for Affirm's network growth. Per the Zacks Consensus Estimate, AFRM is poised for robust 26.8% year-over-year growth in merchant network revenues for the current year. Additionally, the consensus projection for card network revenues in the same period anticipates a significant 25.4% increase compared with the previous year.
Affirm continues to benefit from a high interest environment, contributing to its positive top-line performance. In the preceding year, the interest income metric surged by an impressive 29.8%, reaching $685.2 million. The Zacks Consensus Estimate for the current year reinforces this trend, indicating a 67.6% year-over-year upswing in interest income.
Key Risks
However, there are a few factors that investors should keep an eye on. Growing competition in the BNPL sector, higher funding costs and increasing regulations driven by factors like high interest rates and limited consumer loan demand in the secondary market pose challenges to Affirm's growth. Nevertheless, we believe that a systematic and strategic plan of action will drive its performance in the long term.
Stocks to Consider
Some better-ranked stocks in the Business Services space are SPX Technologies, Inc. (SPXC - Free Report) , CRA International, Inc. (CRAI - Free Report) and Barrett Business Services, Inc. (BBSI - Free Report) . While SPX Technologies sports a Zacks Rank #1 (Strong Buy), CRA International and Barrett Business Services carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of SPX Technologies outpaced estimates in three of the last four quarters and matched the mark once, the average beat being 23.19%. The Zacks Consensus Estimate for SPXC’s 2024 earnings suggests an improvement of 16.7% from the 2023 reported figure. The consensus mark for revenues suggests growth of 13.1% from the 2023 figure. The consensus mark for SPXC’s 2024 earnings has moved 5.5% north in the past 60 days.
CRA International’s earnings outpaced estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 8.06%. The Zacks Consensus Estimate for CRAI’s 2024 earnings suggests an improvement of 5.1% from the 2023 reported figure. The consensus mark for revenues suggests growth of 4.8% from the 2023 figure. The consensus mark for CRAI’s 2024 earnings has moved 6.9% north in the past 30 days.
The bottom line of Barrett Business Services outpaced estimates in each of the last four quarters, the average beat being 77.67%. The Zacks Consensus Estimate for BBSI’s 2024 earnings suggests an improvement of 5.3% from the 2023 reported figure. The same for revenues suggests growth of 6.8% from the 2023 number. The consensus mark for BBSI’s 2024 earnings has moved 1.4% north in the past 30 days.