Despite outpacing the broader market and delivering consistent revenue beats, SoFi Technologies (NASDAQ: SOFI) carries a Zacks Value Style Score of F, signaling the stock trades at a notable premium relative to its peers.
That valuation concern stands in contrast to an otherwise impressive recent performance, with SOFI shares gaining 6.4% over the past month while the Zacks S&P 500 composite fell 2% across the same period.
The broader industry offers little comfort either, as the Zacks Financial – Miscellaneous Services sector, where SoFi competes, declined 2.1% during that same stretch.
Analysts tracking the stock point to a robust earnings growth trajectory, with the current quarter consensus estimate sitting at $0.20 per share, reflecting a year-over-year improvement of 53.9%.
The full-year earnings picture is equally striking, as the consensus estimate of $0.61 per share for the current fiscal year represents a 56.4% jump from the prior year, with that estimate itself revised upward by 2.1% over the past 30 days.
Looking further out, the next fiscal year consensus EPS of $0.87 implies 42.6% growth, and that forward estimate has already moved up 7% over the past month alone.
Revenue momentum is equally hard to dismiss, with analysts projecting $1.4 billion in sales for the current quarter, a year-over-year gain of 38.1%, while full-year estimates of $5.08 billion and $6.41 billion suggest growth of 41.4% and 26.3% for the current and next fiscal years, respectively.
The company’s most recently reported quarter reinforced that growth story, with revenues of $1.37 billion representing a 44.4% year-over-year increase and arriving 9.08% above the Zacks Consensus Estimate of $1.26 billion.
Earnings per share of $0.18 for that same quarter compared favorably to $0.11 a year prior, producing a 5.88% upside earnings surprise, and SoFi has now topped consensus revenue estimates in each of the past four quarters while beating EPS estimates in three of those four periods.
Despite those results, the stock’s Zacks Rank of #3 suggests performance roughly in line with the broader market near term, a rating that accounts for the modest 0.9% downward revision to the current quarter earnings estimate over the last 30 days.
Investors weighing the stock must reconcile a compelling growth profile in both earnings and revenues against a valuation grade that flags the shares as expensive relative to industry peers.
The tension between strong fundamental momentum and a stretched valuation is likely to define how the market treats SOFI in the quarters ahead.
