The consumer price index (CPI) for October rose 0.4% sequentially and 7.7% year over year, coming below the estimates. Despite signs of slowing, inflation remains uncomfortably high. Therefore, the Fed should continue to raise interest rates.
The expected continuation of monetary policy tightening is causing problems for borrowers, as borrowing is expected to become expensive. However, financial companies will benefit from the rise in interest rates, as it will help them increase their income.
Financial service providers have benefited from digital transformation over the past few years. The global financial services market is expected to grow at a pace CAGR of 9.6% to $37.35 trillion by 2026.
With the Fed chair warning that the final level of interest rates will be higher than expected, it might be wise to avoid fundamentally weak financial services stocks SoFi Technologies, Inc. (SOFI) and Exela Technologies, Inc. (XELA). However, the resilience of Forrester Research, Inc. (FORR) to macroeconomic challenges makes it a solid buy.
Stock to buy:
Forrester Research, Inc. (FORR)
FORR operates as an independent research and advisory services firm. The Company operates in three segments: Research, Consulting and Events. It sells its products and services through a direct sales force in various locations around the world.
On May 19, 2022, FORR joined the Work Without Limits Business Network to foster greater employment opportunities for applicants with disabilities. As part of its diversity and inclusion journey, FORR’s recruitment priorities focus on attracting talent from all backgrounds and perspectives.
FORR Vice President of Talent Acquisition, Julie Kelly, said, “We look forward to working with Work Without Limits to maximize employment opportunities for people with disabilities and play our part in breaking down the barriers that prevent them. prevent them from finding work.
For the fiscal third quarter ended September 30, 2022, FORR’s total revenue increased 8.1% year-over-year to $127.68 million. The company’s adjusted operating profit rose 24.5% from the prior year period to $15.81 million. Its adjusted net income rose 38% year over year to $10.90 million. In addition, its adjusted PES came in at $0.57, representing a 39% increase over the prior year quarter.
FORR’s revenue for the quarter ending December 31, 2022 is expected to increase 3.7% year-over-year to $138.71 million. His EPS for the quarter ending March 31, 2023 is expected to increase 4.4% year-over-year to $0.47. The company has an impressive track record of earnings surprises, beating consensus EPS estimates in each of the past four quarters. Over the past five days, the stock has gained 1.4% to close the last trading session at $35.33.
FORR POWR Rankings reflect strong prospects. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. POWR ratings rate stocks on 118 different factors, each with its own weighting.
Within the Financial Services (Corporate) industry, it is ranked first out of 105 stocks. The company has an A rating for quality and a B for value and sentiment.
Click here to see FORR’s additional POWR ratings for Growth, Momentum, and Stability.
Shares for sale:
SoFi Technologies, Inc. (SOFI)
SOFI provides digital financial services and products that enable its members to borrow, save, spend, invest and protect their money. It operates through three segments: lending, technology platform and financial services.
For the third fiscal quarter ended September 30, 2022, SOFI’s total liabilities increased 130.7% to $10.33 billion from $4.48 billion as of December 31, 2021. Its net loss increased by 147% year-on-year to $74.21 million. Additionally, its loss per share rose 80% year over year to $0.09. Additionally, its non-interest expense rose 65.1% year over year to $498.43 million.
SOFI’s EPS for the quarter ending December 31, 2022 is expected to remain negative. The stock has fallen 69.2% year-to-date to close the last trading session at $4.87.
SOFI’s POWR ratings are consistent with its weak fundamentals. It has an overall rating of F, which translates to a strong sell in our proprietary rating system. It is ranked #102 in the same industry. It has an F rating for stability and quality and a D for value and momentum.
To view additional SOFI ratings for growth and sentiment, Click here.
Exela Technologies, Inc. (XELA)
XELA provides global solutions for transaction processing, enterprise information management, document management and digital business process services. The Company operates through three segments: Information and Transaction Processing Solutions (ITPS), Healthcare Solutions (HS) and Legal and Loss Prevention Services (LLPS).
XELA revenue for the third quarter ended September 30, 2022 decreased 5.4% year-on-year to $264.04 million. The company’s net loss attributable to common shareholders increased 522.2% year-over-year to $87.33 million. Its adjusted EBITDA declined 4.6% year over year to $31.80 million. Its loss per share narrowed 25.8% year over year to $1.38.
Analysts expect XELA’s EPS for the quarter ending December 31, 2022 to remain negative. Its fiscal 2022 revenue is expected to decline 2.9% year-over-year to $1.13 billion. The stock has fallen 98.9% year-to-date to close the last trading session at $0.19.
XELA’s bleak outlook is reflected in its POWR ratings. The company has an overall rating of D, which equates to a sell in our proprietary rating system. It is ranked 80th among stocks in the financial services (corporate) sector. Additionally, it has an F rating for sentiment and a D for growth, momentum, and stability.
In total, we rate XELA on eight different levels. Beyond what we’ve stated above, we’ve also given XELA ratings for value and quality. Get all the XELA odds here.
FORR shares were trading at $35.51 per share on Tuesday afternoon, up $0.18 (+0.51%). Year-to-date, the FORR is down -39.54%, compared to a -14.94% rise in the benchmark S&P 500 over the same period.
About the Author: Malaika Alphonsus
Malaika’s passion for writing and interest in financial markets led her to pursue a career in investment research. With degrees in economics and psychology, she aims to help investors make informed investment decisions. After…