Over the past six months, Pathward Financial’s stock price fell to $68.57. Shareholders have lost 13.6% of their capital, which is disappointing considering the S&P 500 has climbed by 22.6%. This might have investors contemplating their next move.
Following the drawdown, is this a buying opportunity for CASH? Find out in our full research report, it’s free for active Edge members.
Why Are We Positive On CASH?
Formerly known as Meta Financial until its 2022 rebranding, Pathward Financial (NASDAQ: CASH) provides banking-as-a-service solutions and commercial finance products, enabling partners to offer financial services like prepaid cards, payment processing, and lending options.
1. Net Interest Income Skyrockets, Fueling Growth Opportunities
While bank generate revenue from multiple sources, investors view net interest income as a cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of one-time fees.
Pathward Financial’s net interest income has grown at a 14% annualized rate over the last five years, better than the broader banking industry and faster than its total revenue.
2. Elite Net Interest Margin Powers Best-In-Class Loan Book
Net interest margin (NIM) serves as a critical gauge of a bank's fundamental profitability by showing the spread between interest income and interest expenses. It's essential for understanding whether a firm can sustainably generate returns from its lending operations.
Over the past two years, we can see that Pathward Financial’s net interest margin averaged an elite 7%, indicating the company has a high-yielding loan book and a low cost of funds.
3. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Pathward Financial’s EPS grew at an astounding 25.6% compounded annual growth rate over the last five years, higher than its 11.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
These are just a few reasons why Pathward Financial is a cream-of-the-crop banking company. With the recent decline, the stock trades at 1.6× forward P/B (or $68.57 per share). Is now a good time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
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