Enova International, Inc.

ENVA Details

Enova International, Inc. (NYSE: ENVA) is a leading technology and analytics company that uses its proprietary technology and customer services to provide digital financial services to customers in 38 states across the United States, Brazil, Australia, and Canada. Instalment loans, receivables purchase agreements (RPAs), and line of credit accounts are among the company's financing products. As of September 16, 2021, the company's market capitalization stood at USD 1.20 billion.

Cumulative Originations (Source: Investor Presentation, August 2021)

Foraying into Money Transfer Market: On March 19, 2021, ENVA closed the acquisition of Pangea Universal Holdings, Inc. (PUH), a Chicago-based payments platform that offers mobile international money remittance services, in exchange for a total consideration of USD 32.9 million (cash payment of USD 30.0 million, plus a USD 2.9 million debt cancellation). With an emphasis on Latin America and Asia markets, this purchase brings ENVA's technology, analytics, and online business capabilities to the international money transfer market.

H1FY21 Results: The company reported a massive surge of 92.14% in net revenues to USD 497.50 million during H1FY21 (ended June 30, 2021) compared to USD 258.92 million during H1FY20, owing to the lower average loan balances in the current period. As a result, ENVA also witnessed an increase in net income (attributable to its equity holders) to USD 156.10 million during H1FY21 vs. USD 53.49 million during H1FY20. However, the net cash from operating activity reduced to USD 219.93 million during H1FY21 from USD 483.45 million during H1FY20.

Key Risks: Lead providers are essential to the company since they supply new consumers. As a result, the company's performance is heavily reliant on lead suppliers or marketing affiliates' desire and capacity to offer consumer leads at reasonable costs. Moreover, customers in Brazil, Canada, and Australia can access ENVA's online business financing solutions. However, any significant change in foreign legislation or deterioration in these countries' political or economic environment might harm the company's sales and cash flow.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

ENVA Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: ENVA stock declined 12.89% in the past six months and is currently leaning towards the higher-band of the 52-week range of USD 15.13 to USD 41.06. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 49.11. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 38.95. Considering the correction in the stock price, expansion into a new industry, strong ROE, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 32.38, down 0.09% as of September 16, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

BM Technologies, Inc.

BMTX Details

BM Technologies, Inc. (NYSE: BMTX) provides digital banking and disbursement services to customers and students across the country with the help of its tech-based banking platform. It utilizes the Banking-as-a-Service (BaaS) framework, attracting more clients for less money than traditional banks. In addition, BMTX connects customers with FDIC-insured partner banks to enable deposits and banking services. It generates revenue from four primary sources: 1) interchange and card revenue, 2) bank servicing fees, 3) account fees, and 4) university fees.

Strategic Development Programs: BMTX introduced its BaaS service to credit unions and community banks on August 04, 2021. BMTX will provide back-office banking operations, fraud and risk management, and customer care assistance to these financial institutions through this initiative.

Joining Forces with GoAskJay: On July 07, 2021, BMTX announced the addition of GoAskJay, a direct-to-consumer insurance and financial marketplace, as its new Workplace Banking platform partner. Under this collaboration, BMTX will include GoAskJay's services in its packages to assist customers in managing their finances.

H1FY21 Results: The company reported a sharp uptick of 51.58% in total operating revenues to USD 47.28 million during H1FY21 (ended June 30, 2021) compared to USD 31.19 million during H1FY20, primarily due to an increase in servicing fees, average deposits, and higher white label project revenues. As a result, It witnessed an increase in H1FY21 net income to USD 17.05 million from a net loss of USD 8.65 million reported in H1FY20. As of June 30, 2021, the company's cash and cash equivalents amounted to USD 19.59 million, with no outstanding debt.

Increasing Unit Metrics (Source: Investor Presentation, August 2021)

Key Risks: The majority of BMTX's revenue comes from a small number of products and markets. Therefore, while it intends to broaden its portfolio and market reach, it may not be able to do so, resulting in adverse operating outcomes. Furthermore, BMTX's banking partners are subject to rigorous regulatory monitoring customary to the banking industry. As a technology-based financial service provider, the firm must also adhere to these laws, which are costly and prohibit certain operations, such as interest rates charged on loans / paid on deposits.

Outlook: BMTX estimates its FY21 EBITDA to be between USD 20 and 22 million, according to its Q2FY21 press release. It also claimed that it plans to extend its existing product relationships, add new white label partners, create a BankMobile Google Plex account in collaboration with Google, and develop a workplace banking vertical.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

BMTX Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: BMTX stock declined 30.63% in the past six months and is currently leaning towards the lower-band of the 52-week range of USD 8.46 to USD 18.35. The stock is currently trading far below its 50 and 200 DMA levels, and its RSI Index is at 38.48. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 11.48. Considering the correction in the stock price, recent partnerships, new product offerings, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 9.31, up 1.86% as of September 16, 2021, at 2:20 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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