Is PSFE Safe? PSFE Stock Forecast, Paysafe News, and PSFE Earnings

Today we are looking at Paysafe Limited (NYSE: PSFE), to determine if you should buy PSFE stock. We will look at PSFE financial ratios, analyst ratings, and current valuation to determine a PSFE stock forecast and price.

What Does PSFE Do?

This description is provided by PSFE Yahoo Finance

“Paysafe Limited provides digital commerce solutions to online businesses, small and medium-sized business merchants, and consumers through its Paysafe Network worldwide. The company operates in two segments, US Acquiring and Digital Commerce. It provides PCI-compliant payment acceptance and transaction processing solutions for merchants and integrated service providers, including merchant acquiring, transaction processing, online solutions, fraud and risk management tools, data and analytics”

PSFE Stock Forecast and Analysis

Paysafe Limited Competition and Comparables

In order to undergo a comparable analysis (to determine PSFE stock value), we need to first outline who PSFE’s competitors are.

These competitors need to be publicly listed, have valid financial metrics/multiples, operate in a similar manner to PSFE, and have a market cap similar to PSFE (if possible).

By keeping this in mind, I found the following list of companies to be some of PSFE stocks closest competitors:

TUYA, ESTC, ST, IPHI, JNPR, G, DXC, WEX, GLOB, ARW

Paysafe News and Information

Recent Paysafe News

Paysafe (NYSE: PSFE), a leading specialized payments platform, today announced a new partnership with Strive Gaming, an advanced player account management (PAM) platform designed for the multi-state requirements of online operators in the North American market.

If you would like to continue reading more about this PSFE News article, you can do so here

Analysis of PSFE Earnings and Financial Ratios

  • PSFE Revenues: In FY 2021, PSFE experienced a yearly increase in revenues of $60.52M (or 4.24%) resulting in a total revenue figure of $1.49B.
  • PSFE Cost of Revenues: In FY 2021, PSFE experienced a yearly increase in their cost of revenues of $64.95M (12.15%), resulting in a total revenue figure of $599.78M. Since the increase (of 12.15%), in PSFE’s cost of revenue was greater (by 7.9%) than the increase (of 4.24%) in PSFE’s revenues, we should expect that PSFE experienced a decrease in their FY gross profits.
  • PSFE Gross Profit: In FY 2021, PSFE experienced a yearly decrease in their gross profit of $-4.43M (or -0.5%) resulting in a total gross profit of $887.24M. This decrease is consistent with our conclusion from the comparison of revenues and cost of revenues between FY and FY.
  • PSFE EBITDA: In FY 2021, PSFE experienced a yearly decrease in their EBITDA of $-17.46M (or -7.02%) resulting in a total EBITDA of $231.13M. This decrease (of -7.02%) stems from the fact that PSFE experienced a decrease in their gross profits of -0.5% (as we saw in the previous bullet point).
  • PSFE Net Income: In FY 2021, PSFE experienced a yearly increase in their net income of $15,761,000 (or 12.44%) resulting in a total net income of $-110.95M.
  • PSFE Earnings Per Share (EPS): As a result of PSFE’s increase in net income of $15,761,000, PSFE’s EPS also increased (by $0.03) from $-0.18 in FY 2020 to $-0.15 in FY 2021

Is PSFE Share Dilution an Issue?

As part of their Q2 2021 earnings release, PSFE stated that they currently have 723.71M Shares Outstanding (weighted average), which is up 0 shares (from 723.71M shares outstanding in Q1 2021). This is good to see as an investor as it their shares have retained their value.

Furthermore, PSFE stock has up to 0 of shares that they can issue (thereby diluting PSFE’s stock). This maximum dilution for the period would only have a dilutionary effect on PSFE of 0.0%, which is great news for investors.

Latest PSFE Stock Analyst Ratings

Here is the current analyst rating distribution for PSFE. In total there are 19 PSFE stock analyst ratings.

Analyst Ratings have provided relatively strong indicators of future price movement, which is why they are used to determine if PSFE stock is a buy or sell

PSFE Stock Forecast and Rating

Currently, we have 3 financial ratings that help investors get a general idea of a company’s valuation. These 3 metrics include DCF, ROE, and P/E, which are very common in the investing/valuation climate.

Firstly, PSFE stock has a DCF rating of 4 — Strong. DCF ratings determine the value behind a company based on their financial projections, expectations, and discount rate (time value of money). This is one of the most used valuation models in the stock market, and thus a high level of importance should be associated with this rating. This rating does not really make sense to me as PSFE is currently losing money, and not growing their revenues very quickly. I think it should be a 2 — Weak or a 3 — Neutral.

Secondly, PSFE stock has an ROE rating of 1 — Very Weak. PSFE’s current ROE is -73.62%, which justifies their rank of 1. ROE shows us how good (or bad) a company is at using their shareholders funds to generate money (returns). ROE is most useful when compared against the industry average, which is currently 13.22%. Since PSFE’s ROE is very low, and well below their competitors, their ROE rank of 1 makes sense

Lastly, PSFE stock has a P/E rating of 2 — Weak. PSFE stock price to earnings ratio is currently -1.6 which justifies their rank Price to Earnings is the most commonly found financial metric and is best used when comparing a company’s p/e to the industry average. PSFE operates in the Information Technology Services industry, which currently has an average P/E of 25.01. PSFE’s P/E is both negative and below their competitors which justifies their rank of 2 — Weak

Overall, based on the 3 previously mentioned fields, PSFE stock has been given a comprehensive rating of 2 — Weak . This rating implies that they might run into financial hardships.

PSFE Stock Price Prediction and Valuation

The Latest PSFE Ratings

As we know, PSFE stock has been given an overall rating of 2 — Weak. This implies that PSFE is now sound fundamentally and is not a good candidate for being “undervalued”. With this in mind, let’s proceed.

PSFE Price Forecast Using Comparable Analysis

  1. Price to Book (P/B): PSFE’s current P/B ratio is 1.34, compared to the average P/B ratio of PSFE’s peers being 3.23. This implies that PSFE is undervalued and their share price should change by a factor of 140.33% to be at fair value (based on PSFE’s P/B compared to the P/B of their peers).
  2. Price to Equity (P/E): PSFE stock P/E ratio is currently -1.6, compared to the average P/E ratio of PSFE’s peers being 25.01. This implies that PSFE is overvalued and their share price should change by a factor of -1,663% to be at fair value (based on PSFE’s P/E compared to the P/E of their peers).

Overall, PSFE stock is overvalued and needs to experience a change in stock price of (an average of) -761.35% to be considered “at fair value”.

This comparable analysis does not make sense due to the unusual nature of PSFE’s financial ratios, and should be taken with a grain (or mountain) of salt.

Is PSFE Stock a Buy or Sell?

Overall, due to the overall stock rating of (Based off of DCF, ROE, and P/E), as well as the fact that a comparable analysis (P/E and P/B) found that 2 — Weak PSFE was overvalued and need to experience a price change of -761.35% in order to be at their fair value, I have concluded the following: .

PSFE looks to be a company that might run into troubles down the line, furthermore, their financial ratios are all over the place which has led me to consider a bear position (if any) for a medium timeframe. I would look for a 10–20% drop before exiting a position.

Originally published at https://utradea.com.

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