Up 47%, Is it Time to Buy Payfare Stock?

Payfare (TSX:PAY) stock has been rising higher in the last six months after dropping significantly since 2021. Is it time to buy?

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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Published April 12, 2024 9:30 pm EDT

Shares of payment technology company Payfare (TSX: PAY) have been doing quite well since the market bottom last year. In that time, Payfare stock has seen shares rise a whopping 47%! But has evened out recently, remaining short of its 52-week highs.

Should investors hold out for more from this stock? Or is now the time to buy Payfare stock before it climbs higher?

About Payfare stock

First off, let’s talk about Payfare stock. Payfare is a financial technology company based in Toronto that specializes in providing mobile banking and payment solutions for gig economy workers. Its primary focus is on providing financial services tailored to the needs of rideshare and delivery drivers as well as other independent contractors who rely on gig work for income.

Payfare stock offers a mobile banking app and prepaid card specifically designed to help gig workers manage their finances more effectively. This includes features such as instant access to earnings, expense tracking, and tools to help drivers maximize their income.

With the gig economy surging over the years, Payfare stock climbed to all-time highs back in 2021 at around $12.50 per share. Yet since that time, it’s come down to be just half of that share price.

The recent past

To consider whether or not to pick up Payfare stock once more, let’s consider the recent past. By that, I mean looking at the company’s earnings performance over the last few quarters. This should tell us whether it’s been seeing some momentum. And whether that’s been positive or negative.

During the second quarter, Payfare stock achieved a record $46.5 million in revenue. It also outlined the goal of achieving full-year 2023 guidance of between $185 and $195 million. By the third quarter, it climbed higher to $47.2 million and provided guidance of $50 million for the fourth quarter. This would put it well within the guidance the company hoped to achieve for the year.

Now investors are awaiting Payfare stock’s fourth-quarter and annual guidance after a delay announced earlier this month. However, it also comes after the company announced a buyback program.

All taken into consideration, it seems that Payfare stock might have some hiccoughs but has been seeing positive momentum. And that doesn’t seem to be slowing down.

Bottom line

Payfare stock, therefore, has seen shares come down, it’s true. But it’s also been climbing significantly in the last six months. Up 47% in that time, shares still could be a good buy on the TSX today — especially as it trades at 25.71 times earnings, marking a lower share price compared to how much the company is earning. And it seems analysts believe that will rise in the future, with a forward ratio trading at 101 times earnings.

Meanwhile, its profit margin remains strong for a new company at 6.37%, with a market-beating return on equity of 19.58%. Therefore, Payfare stock doesn’t only look like a deal. It looks like it’s just getting started.