Kalkine Media - Payfare (TSX: PAY), a Toronto-based financial technology company, has experienced notable growth since the market's bottom last year, with its stock surging by 47%. While it has recently stabilized, it still falls short of its 52-week highs.
The company specializes in providing mobile banking and payment solutions tailored for gig economy workers, particularly rideshare and delivery drivers, and other independent contractors reliant on gig work for income. Payfare's offerings include a mobile banking app and prepaid card designed to help gig workers manage their finances effectively, offering features such as instant earnings access and expense tracking. Amidst its innovative approach, Payfare stands as a notable player among TSX technology stocks, leveraging technology to address the unique financial needs of gig workers and independent contractors.
Although Payfare's stock reached all-time highs in 2021 at around $12.50 per share, it subsequently declined to half that value. However, recent earnings performance suggests positive momentum. In the second quarter, Payfare achieved record revenue of $46.5 million, with guidance of $185 to $195 million for full-year 2023. Revenue increased to $47.2 million in the third quarter, with a $50 million guidance for the fourth quarter, aligning with the company's annual targets.
Investors await Payfare's fourth-quarter and annual guidance following a recent delay announcement, which coincided with the company's introduction of a buyback program. Despite some uncertainties, Payfare appears to be experiencing positive momentum.
Considering its recent climb of 47% in the last six months, Payfare stock could still present a favorable opportunity on the TSX, particularly as it trades at 25.71 times earnings, indicating a lower share price relative to its earnings. Analysts anticipate future growth, reflected in a forward ratio trading at 101 times earnings.
Moreover, Payfare boasts a strong profit margin of 6.37% for a relatively new company, coupled with a market-beating return on equity of 19.58%. This suggests that Payfare's growth potential is just beginning to unfold, making it an attractive investment option.