1 Strong Trending Financial Stock And 1 To Avoid

With a slower increase in supplier and consumer prices signaling an easing of inflationary pressures, hopes of less aggressive interest rate hikes by the Federal Reserve are also rising.

While a broad economic recovery bodes well for the financial services sector, given rising borrowing costs and credit risks, traders should be judicious in picking stocks from this space.

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Given its strong price trends, it could be wise to buy NerdWallet, Inc. (NRDS) to capitalize on the industry tailwinds. On the other hand, Ally Financial Inc. (ALLY) might be best avoided now, given its downtrend.

NerdWallet, Inc. (NRDS)

NRDS operates as a personal finance company. Through its platform, it delivers a range of financial products, including credit cards, mortgages, insurance, SMB products, personal loans, banking, investing, and student loans, to empower consumers and small and medium-sized businesses (SMBs) to make informed financial decisions at the right time.

For the fiscal 2022 third quarter, which ended September 30, 2022, NRDS’s revenue increased 45% year-over-year to $142.6 million, driven primarily by success across credit cards, banking, personal loans, and SMB verticals. During the same period, the company’s net income came in at $0.7 million or $0.01 per share, compared to a net loss of $7.8 million or $0.16 per share in the previous-year quarter.

Analysts expect NRDS to report revenue of $139.59 million for the fourth quarter of the current fiscal, ending December 2022, registering a 40.3% year-over-year increase. During the same period, the company’s EPS is expected to come in at $0.08, compared to a loss of $0.13 per share in the year-ago period.

Owing to its strong performance and solid growth prospects, NRDS is currently commanding a premium valuation compared to its peers. In terms of forward P/E, NRDS is currently trading at 67.53x compared to the industry average of 10.39x. Also, its forward EV/EBITDA multiple of 15.43 compares to the industry average of 12.28. Continue reading "1 Strong Trending Financial Stock And 1 To Avoid"