(•‿-) Growth stock with favorable valuation 📲 PAYFARE
I have recently bought/increased the following stocks in my wikifolios, FollowMyMoney and/or my private accounts:
PAYFARE, $PYFRF, $PAY:CA, ISIN #CA70437C1095
https://corp.payfare.com/investors/
All other currencies are in CAN $!
The company
Payfare Inc. is a global financial technology company based in Canada that provides digital banking and instant payment solutions for gig workers. The company works with platforms and marketplaces such as Uber, Lyft and DoorDash to provide financial support to their employees.
It provides contract workers with instant access to their earnings and a digital banking service, as well as multiple payout options for employees, such as on demand or automatically every day or after every task, shift or sale.
The company offers its services to various industries, such as trades, construction, hospitality, ride-sharing, healthcare, domestic services, creative professionals, transportation companies and freelancers.
Almost all sales currently come from the USA.
Payfare had over 1,400,000 active users as at December 31, 2023, which corresponds to an increase of around 16% compared to active users as at September 30, 2023 and 33% compared to active users as at December 31, 2022.
The gig economy accounts for nearly 39% of the U.S. labor force, according to Payfare. There is a growing supply of gig workers, fueled in part by:
A cultural shift towards a flexible working and living environment
The working middle class is sometimes forced to earn an additional part-time income through gig work
Rising digitization rates due to smartphones and increasing Internet access increase the number of eligible gig workers
The latest results
The Q3/23 quarterly results were as follows:
- Record gross profit of $12.2m (26% margin), up 77% year-on-year.
- Net profit of $4.8 million ($0.10 per share), up 684% year-on-year.
- Adjusted net profit of USD 7.5 million (USD 0.16 per share), up 337 %
- Return on equity1 of 48 %.
- Adjusted EBITDA of USD 6.3 million, up 373% year-on-year.
- Free cash flow of USD 3.6 million, up 29% on the previous year
Rapid growth
The following chart shows the development of sales:
The following chart shows the development of the number of customers:
The balance sheet is also impressive:
Cash and cash equivalents of $56 million at the end of Q3/23.
The growth targets are fully financed by internally generated free cash flow.
No debts.
The fundamental key figures
I expect sales to develop as follows (in CAN $ million):
Earnings per share developed as follows:
The fundamental key figures for 2024 (own calculations): P/E ratio (price/earnings ratio) < 13; EV/EBIDTA (enterprise value/EBIDTA) < 10. market capitalization approx. 336 million CAN $
The next quarterly figures will be announced on March 21. I expect strong growth and therefore rising share prices.
My investment style is a mixture of value/momentum investor. Based on the fundamental data (VALUE) and the share price performance of the last 52 weeks (MOMENTUM), the share is currently one of my TOP 25 shares. These are the stocks where I see the highest chances of strong price gains in the medium term (1-3 years). I also buy these stocks in my wikifolios and on FollowMyMoney .
"Speculative investments are like a tennis match: the key is to concentrate fully on the next ace instead of getting annoyed about the last double fault."
A. Gerstenberger
Post in GERMAN: (•‿-) Wachstumswert mit günstiger Bewertung 📲 PAYFARE
Disclaimer / Exclusion of liability
All content is for information purposes only and does not constitute investment advice or a solicitation to buy or sell securities or other financial market instruments. Naturally, I endeavor to present the facts to the best of my knowledge and belief, but they may still be partially or completely incorrect.
I therefore accept no liability whatsoever for investment decisions that you make on the basis of the information presented here.
Conflict of interest: At the time of publication, the author of this publication holds shares/securities in the stocks/companies discussed here and intends to sell them depending on the market situation and could benefit in particular from increased trading liquidity. This represents a concrete and clear conflict of interest.