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Pagaya Trades at a Discount: Is the Stock Worth Investing In?
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Key Takeaways
Pagaya trades at a 0.89X forward P/S, below the industry average and key competitors.
PGY raised $3.7B across six ABS deals in 2Q26 and added 11 investors, bringing its total to 174.
Pagaya's 1H26 revenues rose to $705M, while core operating expenses declined 6% y/y.
The Pagaya Technologies (PGY - Free Report) stock is currently undervalued in terms of its price/sales (P/S) ratio when compared with peers. While making investment decisions, investors mostly look at a company’s valuation. Specifically, value investors try to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts compared with fair value.
Such investors sometimes prefer to look at a company’s P/S ratio because this metric considers sales, something that is far harder to manipulate with accounting tricks than earnings. In the case of PGY, which is one of the most compelling fintech companies in today’s market, the stock is currently trading at a forward 12-month P/S ratio of 0.89X, below the industry average of 2.59X.
Also, as you can see in the chart below, PGY’s current P/S ratio is significantly lower than its high over the past three years, which suggests some level of undervalued trading compared with historical norms.
P/S (F12M)
Image Source: Zacks Investment Research
Pagaya’s valuation also compares favorably to its close competitors, Upstart Holdings (UPST - Free Report) and Virtu Financial, Inc. (VIRT - Free Report) . Upstart is currently trading at a forward 12-month P/S ratio of 1.29X, while Virtu Financial has a P/S (F12M) of 3.22X.
Thus, Pagaya seems like an attractive investment option now if we consider its P/S ratio. Its low valuation reflects that it is currently trading at a discount and, hence, has the potential for significant gains when the market recognizes its true worth.
However, before making any investment decision, it is better to have a look at the company’s fundamentals and growth prospects.
Key Positives of Pagaya
Diversified Funding Base: A diversified funding base is a key positive for Pagaya. The company continues to broaden its funding base, supporting an upfront model that raises cash before loans are originated. In second-quarter 2026, Pagaya raised $3.7 billion in funding across six asset-backed securities (ABS) transactions, its largest quarterly funding volume to date.
It also added 11 new investors, bringing the total to 174. Further strengthening its funding diversity, Pagaya has entered its first forward flow agreement with Neuberger Specialty Finance for the purchase of up to $700 million of auto loans sourced through its lending network.
Funding channels are becoming more flexible, with 40% of funding now coming through non-prefunded ABS products alongside forward flow and revolving structures. The company has expanded its ALPF receivables facility to $100 million from $65 million. This broader funding base improves execution visibility as network volume scales across personal loans, auto and point of sale (POS).
Multi-Product Expansion: Multi-product expansion is expected to deepen Pagaya’s partner economics. New products are widening partner use cases and raising revenues per application. In first-half 2026, revenues from fees increased as partner adoption broadened. The company's product-led playbook is being applied across personal loans, auto and POS, supported by pre-built integrations that can shorten partner onboarding.
In personal loans, the Affiliate Optimizer engine contributed more than $1 billion of network volume in the second quarter. Experian Activate has been adopted by key partners, with additional partners targeted in the second half of 2026, including regional banks.
In auto, Pagaya is using dynamic offer optimization to structure down payment, annual percentage rate, loan-to-value and term in real time at the dealer point of sale. Seven new partners were onboarded over the last six months across personal loans, auto and POS, supporting broader penetration beyond the company's flagship product.
Improving Operating Leverage: Improving operating leverage and cost efficiency has been driving Pagaya’s earnings growth of late. Across 2025, monetization and efficiency strengthened. The company’s revenue growth outpaced expense growth, allowing margins to improve and turning prior losses into positive net income.
In 2025, adjusted EBITDA rose sharply, showing that the platform scaled efficiently as utilization increased. The company’s profitability streak continued in 2026, with spending in check. In the first half of this year, total revenues increased to $705 million from $616.4 million in the year-ago period, while operating expenses rose only slightly to $519.2 million from $512.2 million. Core operating expenses declined 6% year over year and were 31% of fee revenue less production costs, a record low.
Management noted that core OpEx has been broadly flat for about 18 months, even as revenues and profits scaled. Management expects 2026 GAAP net income of $155-$180 million and adjusted EBITDA of $460-$490 million, reflecting confidence in further scale without a major expense ramp.
Analyzing PGY’s Price Performance
Pagaya has performed remarkably well this year. Over the past six months, the PGY stock has gained 49.1%, outperforming the industry’s 4.6% rally. The company’s performance has also been better than that of Upstart and Virtu Financial.
Upstart shares have lost 9.8% and the VIRT stock has appreciated 22.2% in the past six months.
6-Month Price Performance
Image Source: Zacks Investment Research
Analyst Sentiments on Pagaya Stock
Analysts do not seem too optimistic regarding PGY’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for Pagaya’s 2026 and 2027 earnings has been unchanged at $3.72 and $4.13, respectively.
Earnings Estimate Revision
Image Source: Zacks Investment Research
How to Approach the PGY Stock?
Pagaya’s discounted valuation, expanding funding base, multi-product growth and improving operating leverage provide a solid foundation for long-term upside. The company is scaling revenues without a comparable increase in expenses, while greater use of forward-flow and other diversified funding structures should improve funding flexibility as network volume grows.
However, the current valuation discount alone may not be enough to support a more bullish stance. Funding costs and tighter ABS economics are pressuring revenue generated per unit of network volume, with fee revenue less production costs as a percentage of network volume declining year over year in the first half of 2026.
At the same time, earnings estimates for 2026 and 2027 have been unchanged over the past month, indicating a lack of near-term upward revisions that could provide another catalyst for the shares.
Therefore, Pagaya’s improving profitability, scalable platform and attractive valuation support retaining the stock, but margin pressures and muted earnings-estimate revisions argue against becoming too aggressive at current levels. Investors should prefer to wait for clearer evidence of stabilization in capital-markets economics or stronger earnings-revision momentum before building fresh positions.
View the Zacks #1 Rank List
Image: Bigstock
Pagaya Trades at a Discount: Is the Stock Worth Investing In?
Key Takeaways
The Pagaya Technologies (PGY - Free Report) stock is currently undervalued in terms of its price/sales (P/S) ratio when compared with peers. While making investment decisions, investors mostly look at a company’s valuation. Specifically, value investors try to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts compared with fair value.
Such investors sometimes prefer to look at a company’s P/S ratio because this metric considers sales, something that is far harder to manipulate with accounting tricks than earnings. In the case of PGY, which is one of the most compelling fintech companies in today’s market, the stock is currently trading at a forward 12-month P/S ratio of 0.89X, below the industry average of 2.59X.
Also, as you can see in the chart below, PGY’s current P/S ratio is significantly lower than its high over the past three years, which suggests some level of undervalued trading compared with historical norms.
P/S (F12M)
Image Source: Zacks Investment Research
Pagaya’s valuation also compares favorably to its close competitors, Upstart Holdings (UPST - Free Report) and Virtu Financial, Inc. (VIRT - Free Report) . Upstart is currently trading at a forward 12-month P/S ratio of 1.29X, while Virtu Financial has a P/S (F12M) of 3.22X.
Thus, Pagaya seems like an attractive investment option now if we consider its P/S ratio. Its low valuation reflects that it is currently trading at a discount and, hence, has the potential for significant gains when the market recognizes its true worth.
However, before making any investment decision, it is better to have a look at the company’s fundamentals and growth prospects.
Key Positives of Pagaya
Diversified Funding Base: A diversified funding base is a key positive for Pagaya. The company continues to broaden its funding base, supporting an upfront model that raises cash before loans are originated. In second-quarter 2026, Pagaya raised $3.7 billion in funding across six asset-backed securities (ABS) transactions, its largest quarterly funding volume to date.
It also added 11 new investors, bringing the total to 174. Further strengthening its funding diversity, Pagaya has entered its first forward flow agreement with Neuberger Specialty Finance for the purchase of up to $700 million of auto loans sourced through its lending network.
Funding channels are becoming more flexible, with 40% of funding now coming through non-prefunded ABS products alongside forward flow and revolving structures. The company has expanded its ALPF receivables facility to $100 million from $65 million. This broader funding base improves execution visibility as network volume scales across personal loans, auto and point of sale (POS).
Multi-Product Expansion: Multi-product expansion is expected to deepen Pagaya’s partner economics. New products are widening partner use cases and raising revenues per application. In first-half 2026, revenues from fees increased as partner adoption broadened. The company's product-led playbook is being applied across personal loans, auto and POS, supported by pre-built integrations that can shorten partner onboarding.
In personal loans, the Affiliate Optimizer engine contributed more than $1 billion of network volume in the second quarter. Experian Activate has been adopted by key partners, with additional partners targeted in the second half of 2026, including regional banks.
In auto, Pagaya is using dynamic offer optimization to structure down payment, annual percentage rate, loan-to-value and term in real time at the dealer point of sale. Seven new partners were onboarded over the last six months across personal loans, auto and POS, supporting broader penetration beyond the company's flagship product.
Improving Operating Leverage: Improving operating leverage and cost efficiency has been driving Pagaya’s earnings growth of late. Across 2025, monetization and efficiency strengthened. The company’s revenue growth outpaced expense growth, allowing margins to improve and turning prior losses into positive net income.
In 2025, adjusted EBITDA rose sharply, showing that the platform scaled efficiently as utilization increased. The company’s profitability streak continued in 2026, with spending in check. In the first half of this year, total revenues increased to $705 million from $616.4 million in the year-ago period, while operating expenses rose only slightly to $519.2 million from $512.2 million. Core operating expenses declined 6% year over year and were 31% of fee revenue less production costs, a record low.
Management noted that core OpEx has been broadly flat for about 18 months, even as revenues and profits scaled. Management expects 2026 GAAP net income of $155-$180 million and adjusted EBITDA of $460-$490 million, reflecting confidence in further scale without a major expense ramp.
Analyzing PGY’s Price Performance
Pagaya has performed remarkably well this year. Over the past six months, the PGY stock has gained 49.1%, outperforming the industry’s 4.6% rally. The company’s performance has also been better than that of Upstart and Virtu Financial.
Upstart shares have lost 9.8% and the VIRT stock has appreciated 22.2% in the past six months.
6-Month Price Performance
Image Source: Zacks Investment Research
Analyst Sentiments on Pagaya Stock
Analysts do not seem too optimistic regarding PGY’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for Pagaya’s 2026 and 2027 earnings has been unchanged at $3.72 and $4.13, respectively.
Earnings Estimate Revision
Image Source: Zacks Investment Research
How to Approach the PGY Stock?
Pagaya’s discounted valuation, expanding funding base, multi-product growth and improving operating leverage provide a solid foundation for long-term upside. The company is scaling revenues without a comparable increase in expenses, while greater use of forward-flow and other diversified funding structures should improve funding flexibility as network volume grows.
However, the current valuation discount alone may not be enough to support a more bullish stance. Funding costs and tighter ABS economics are pressuring revenue generated per unit of network volume, with fee revenue less production costs as a percentage of network volume declining year over year in the first half of 2026.
At the same time, earnings estimates for 2026 and 2027 have been unchanged over the past month, indicating a lack of near-term upward revisions that could provide another catalyst for the shares.
Therefore, Pagaya’s improving profitability, scalable platform and attractive valuation support retaining the stock, but margin pressures and muted earnings-estimate revisions argue against becoming too aggressive at current levels. Investors should prefer to wait for clearer evidence of stabilization in capital-markets economics or stronger earnings-revision momentum before building fresh positions.
At present, Pagaya carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.