As the financial services industry continues its rapid evolution, technological advancements and growing trends such as digital credit-as-a-service, AI integration, and innovative loan offerings are reshaping the sector.
In an ever-evolving financial landscape, quality financial stocks CPI Card Group Inc. (PMTS), Regional Management Corp. (RM), and UBS Group AG (UBS) are well-positioned to deliver long-term value and resilience, making them attractive options for investors looking to navigate the complexities of today's market.
The financial services sector is experiencing growth driven by the adoption of EMV technology, the expansion of new business finance models, increased demand for risk management services, and the use of blockchain to combat fraud. Additionally, the rise of cryptocurrencies, growing wealth among high-net-worth individuals, increased digital banking usage, higher demand for alternative investments, and government support are expected to drive the market in the coming years.
The global financial services market, valued at $30.90 trillion in 2023, is projected to grow at a steady rate of 7.4%, reaching $44.10 trillion by 2028.
Given these favorable trends, let's take a closer look at the financial stocks:
CPI Card Group Inc. (PMTS)
PMTS designs and produces financial payment cards, including EMV, contactless, and private label credit cards, along with integrated services like personalization and instant issuance. Its products cater to debit and credit card issuers, prepaid card program managers, community banks, and credit unions in the United States.
PMTS’s revenue has grown at a CAGR of 7.8% over the past three years and its total assets have risen at a CAGR of 10.7% over the same time frame.
On October 16, PMTS announced its readiness to produce innovative contactless payment cards featuring Infineon’s SECORA Pay Green technology. Manufacturing began in September, and the company is prepared to collaborate with issuers on pilot programs.
On October 1, PMTS announced the pricing of a secondary offering of 1,200,000 shares of its common stock by Parallel49 Equity-affiliated stockholders at $21 per share to the public. Underwriters have a 30-day option to purchase an additional 180,000 shares, with the offering expected to close by October 2, 2024, pending customary conditions.
During the fiscal third quarter that ended September 30, 2024, PMTS’s total net sales increased 17.8% year-over-year to $124.75 million. Its income from operations grew 37.3% from the year-ago value to $17.80 million. In addition, the company’s net income and EPS came in at $1.29 million and $0.11, respectively.
Analysts expect PMTS’s EPS and revenue for the fourth quarter ending December 31, 2024, to increase 142.1% and 17.2% year-over-year to $0.53 and $120.54 million, respectively. It surpassed the Street revenue estimates in three of the trailing four quarters, which is promising.
Over the past year, the stock has gained 70.6% to close the last trading session at $32.57. It soared 69.7% year-to-date. It has a 24-month beta of 1.07.
PMTS’s POWR Ratings reflect its robust outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
PMTS has a B grade in Growth, Stability, Sentiment, and Quality. It is ranked #1 out of 83 stocks in the Financial Services (Enterprise) industry.
Beyond what we have stated above, we also have given PMTS grades for Value and Momentum. Get all the PMTS’s ratings here.
Regional Management Corp. (RM)
RM is a consumer finance company offering installment loans, retail financing, and various insurance products to customers with limited access to traditional credit in the United States. Its loans are sourced through branches, direct mail campaigns, digital partners, and its consumer website.
RM’s revenue has grown at a CAGR of 12% over the past three years and its total assets have risen at a CAGR of 11.5% over the same time frame.
On December 2, RM announced a $30 million stock repurchase program alongside growth expectations for 2025. CEO Robert W. Beck highlighted the company's strong performance, liquidity, and capital position as drivers for the program, which was aimed at capitalizing on the undervaluation of its common stock.
On November 27, RM completed its 11th asset-backed securitization, issuing $250 million in notes with a weighted-average coupon of 5.3%, secured by $284 million in receivables. The "AAA"-rated Class A notes mark a significant improvement over prior issuances, and proceeds were partially used to retire higher-cost RMIT 2022-2B notes.
In the fiscal third quarter ended September 30, 2024, RM’s total revenue increased 3.9% year-over-year to $146.34 million. Its income before income taxes was $10.17 million. Moreover, its net income and EPS stood at $7.66 million and $0.76, respectively.
Street expects RM’s revenue and EPS for the year ending December 31, 2024, to increase 6.6% and 144.3% year-over-year to $587.80 million and $4.06, respectively.
The stock climbed 29.6% year-to-date and has returned 31.6% over the past year to close the last trading session at $32.50. It has a 24-month beta of 1.18.
RM’s POWR Ratings reflect strong prospects. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, Stability, Momentum, and Quality. It is ranked #1 out of 47 stocks in the Consumer Financial Services industry.
To access RM’s Sentiment ratings, click here.
UBS Group AG (UBS)
UBS, headquartered in Zurich, Switzerland, provides financial services globally through divisions like Wealth Management, Asset Management, and Investment Banking. Its offerings include investment advice, corporate banking, lending, personal banking, and asset management solutions.
UBS’s revenue has grown at a CAGR of 10.6% over the past three years and its total assets have risen at a CAGR of 14.3% over the same time frame.
On December 10, UBS announced the per-security amounts payable, referred to as the "Call Settlement Amounts," for seven UBS-issued exchange-traded notes (ETNs).
On December 6, UBS announced coupon payments for five ETRACS Exchange Traded Notes on NYSE Arca and expected payments for three ETRACS ETNs on NASDAQ.
UBS’s total revenues increased 5.5% year-over-year to $12.33 billion in the fiscal third quarter that ended on September 30, 2024. Its operating income was $1.93 billion, compared to a loss of $184 million in the prior year quarter. While its net profit attributable to shareholders stood at $1.43 billion, compared to a loss of $715 million in the prior year quarter. Its EPS was $0.43, compared to a loss of $0.22 in the prior year quarter.
Street expects UBS’s revenue for the fiscal year (ending December 31, 2024) to increase 15.8% year-over-year to $47.40 billion. Its EPS for the same quarter is expected to grow 101.1% from the prior year to $1.68. In addition, it surpassed the consensus revenue estimates in each of the trailing four quarters.
Shares of UBS have gained 2.8% over the past year to close the last trading session at $30.02. It has a 60-month beta of 1.
UBS’s bright prospects are apparent in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Growth and Stability. Within the Foreign Banks industry, it is ranked #11 out of 90.
Click here to see UBS’ ratings for Value, Momentum, Quality, and Stability.
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PMTS shares were unchanged in premarket trading Thursday. Year-to-date, PMTS has gained 69.72%, versus a 24.51% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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