SoFi Technologies (SOFI) started the week strong, headed towards its best performance on the stock market since the fall of 2022. It reached as high as 23% before correcting at around 17%.
This is a result of the financial technology company delivering bombastic earnings for the fourth quarter of 2023, in which it posted a milestone profit. Just last year SoFi took on a huge $40 million loss – but in a complete 180-degree turnaround, it reported a $48 million net income for 2023 Q4. The FactSet consensus was merely breakeven.
Adjusted EBITDA of $181 million was more than double the $70 million from last year, and well north of the $140 million analysts were expecting. This was largely due to a 35% jump in net revenue, which came in at $615 million compared to $575 million analysts were forecasting.
SoFi’s CEO Anthony Noto says that the company is paying less for loans as a result of high-quality deposit growth, enhancing profitability. Lending volumes surged in the quarter, up 31% across the board while student and home loans saw 95% and 193% growth respectively.
Another factor contributing to the quarter’s success was a 20% growth in investment products – and things are only going to get better as the company has recently begun offering alternative investments to its customers.
Looking to the current quarter, SoFi expects to report adjusted net revenue of $550 million to $560 million – which is shy of the $578 million analysts are expecting. Adjusted EBITDA will come in between $110 million to $120 million. Again, this is just short of the $125 million analysts are calling for.
The full-year GAAP earnings expectation for SoFi is currently slated for 7-8 cents, while the consensus is just 5 cents. The company is already looking ahead to 2026, putting out a GAAP earnings range of 55 cents to 80 cents – suggesting solid improvement over the next few years.
SOFI may be down 7% so far in 2024, but today’s news is a great effort to right the ship. That being said, what should investors or potential traders do with this information? We’ve assessed the opportunity through the VectorVest stock forecasting software and found 2 reasons to consider buying today…
SOFI Has Poor Safety, But Good Upside Potential and Excellent Timing Make it a BUY
VectorVest is a proprietary trading software that simplifies your trading strategy for better efficiency and clarity. It eliminates human error, emotion, and guesswork by giving you all the insights you need in 3 ratings: relative value (RV), relative safety (RS), and relative timing (RT).
Each sits on its own scale of 0.00-2.00 with 1.00 being the average. This makes interpretation quick and easy, but it gets even better. You’re given a clear buy, sell, or hold recommendation based on the current overall VST rating for a given stock. Here’s what we found for SOFI:
- Good Upside Potential: The RV rating is a comparison between a stock’s long-term price appreciation potential (forecasted 3 years out), AAA corporate bond rates, and risk. It offers much better insight than a simple comparison of price to value alone. SOFI has a good RV rating of 1.12.
- Poor Safety: The RS rating is a risk indicator calculated through a detailed analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. SOFI has a poor RS rating of 0.74 right now.
- Excellent Timing: The RT rating of 1.37 reflects the stock’s recent performance, and suggests that now is the time to buy as the stock continues to rise in price. This rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 1.12 is good for SOFI, and it earns the stock a BUY recommendation in the VectorVest system. Learn more about this opportunity through a free stock analysis today!
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VectorVest advocates buying safe, undervalued stocks, rising in price. SOFI has gained 17% so far Monday after delivering solid earnings and upbeat guidance for the road ahead. The stock may have poor safety, but good upside potential and excellent timing make this stock a BUY.
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