Even though concerns related to data security have been dampening the fintech industry’s near-term growth prospects, the industry holds immense upside potential in the long run due to the increasing adoption of advanced technologies. Investors’ optimism in fintech stocks is evident from the Global X FinTech ETF’s (FINX) 5.5% gain over the past month compared to the SPDR S&P 500 Trust ETF’s (SPY) 0.6% loss.
Moreover, the Federal Reserve could raise interest rates as early as 2023 and recently indicated its willingness to reduce asset purchases before the end of the year, which bodes well for fintech companies. According to The ExpressWire report, the fintech market is expected to grow at a CAGR of 8.6% between 2021 and 2024.
Given this backdrop, it could be wise to bet on fundamentally strong fintech stocks Sapiens International Corporation N.V. (SPNS) and QIWI plc (QIWI). These two stocks have an overall B (Buy) rating in our proprietary POWR Ratings system.
Sapiens International Corporation N.V. (SPNS)
Headquartered in Holon, Israel, SPNS provides software solutions for the insurance and financial services industries. The company offers Sapiens CoreSuite and Sapiens IDITSuite for personal, commercial, and specialty lines; and Sapiens CoreSuite, Sapiens UnderwritingPro, Sapiens ApplicationPro, Sapiens IllustrationPro, and Sapiens ConsolidationMaster for life, pension, and annuities.
On September 13, SPNS announced the integration of Sapiens ReinsuranceMaster for Old Mutual Insure. Roni Al-Dor, SPNS’ president and CEO, said, “The advanced capabilities offered by Sapiens' ReinsuranceMaster maximizes our collaboration and will support Old Mutual Insure's immediate and future needs.”
SNPS’ non-GAAP revenue surged 23.6% year-over-year to $115 million in the second quarter that ended June 30, 2021. The company’s non-GAAP operating income grew 17.9% year-over-year to $19.80 million, while its non-GAAP net income came in at $16 million, representing a 19.7% year-over-year increase. Also, its non-GAAP EPS came in at $0.29, up 11.5% year-over-year.
The company’s EPS is expected to increase 14% year-over-year to $1.14 in fiscal 2021. In addition, it surpassed Street EPS estimates in three of the trailing four quarters. Its revenue is expected to increase 22% year-over-year to $117.94 million for the quarter ending September 30, 2021. Over the past three months, the stock gained 2.3% to close yesterday’s trading session at $28.19.
SPNS’ POWR Ratings reflect this promising outlook. The company has an overall grade of B, which translates to a Buy rating in our proprietary ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has a B grade for Value, Momentum, and Stability. Within the Software - Business industry, SPNS is ranked #12 out of 60 stocks. Click here to see SPNS’ ratings for Growth, Sentiment, and Quality as well.
Click here to check out our Software Industry Report for 2021
QIWI plc (QIWI)
Based in Nicosia, Cyprus, QIWI operates electronic online payment systems internationally. It operates through Payment Services, Consumer Financial Services, and Rocketbank segments. The company offers online, mobile, and physical payment services through a network of approximately 94,000 kiosks and 19,000 terminals that run its proprietary software.
On August 19, 2021, Andrey Protopopov, QIWI's CEO, said, “We are constantly enhancing our product portfolio mix and look for new opportunities that emerge on the market. Despite the headwinds we face, we are committed to achieving our goals. I believe, together with our professional team, we are able to deliver sustainable and profitable long-term growth to our shareholders.”
QIWI’s payment services revenue climbed 5.2% year-over-year to $78.50 million for the fiscal second quarter that ended June 30, 2021. Its total liabilities decreased 33.3% year-over-year to $475 million. The company’s payment services volume increased 32% year-over-year to $6.30 billion.
QIWI’s POWR Ratings reflect its solid prospects. The company has an overall grade of B, which translates to a Buy rating in our proprietary ratings system. In addition, it has a B grade for Value and Momentum.
Click here to see the additional POWR Ratings for QIWI (Stability, Growth, Quality, and Sentiment). It is ranked #4 out of 13 stocks in the Foreign Consumer Finance industry.
SPNS shares were unchanged in after-hours trading Friday. Year-to-date, SPNS has declined -4.84%, versus a 18.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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