Pagaya Technologies Ltd. (NASDAQ: PGY)

Sector: Technology Industry: Software - Infrastructure CIK: 0001883085
Market Cap 1.84 Bn
P/B 4.20
P/E -9.50
P/S 1.48
ROIC (Qtr) 55.96
Div Yield % 0.00
Rev 1y % (Qtr) 36.13
Total Debt (Qtr) 802.42 Mn
Debt/Equity (Qtr) 1.83

About

Pagaya Technologies Ltd., commonly referred to as PGY, is a technology company that operates in the financial services industry. The company was incorporated in 2016 and is headquartered in New York City, with an additional office in Tel Aviv, Israel. Pagaya's main business activities involve using artificial intelligence-powered technology and data science to improve upon legacy underwriting practices in the United States. The company has built a network connecting financial institutions, their customers, and investors, which facilitates greater...

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Price action

Investment thesis

Bull case

  • Robust free cash flow of 176.09M exceeds capital expenditure of 14.79M by 11.90x, indicating strong organic growth funding capability.
  • Operating cash flow of 190.89M provides strong 7.35x coverage of tax liabilities 25.98M, showing excellent fiscal position.
  • Cash reserves of 264.77M provide comfortable 10.19x coverage of tax obligations 25.98M, showing strong fiscal management.
  • Robust R&D investment of 74.74M at 0.31x of SG&A 238.03M demonstrates strong commitment to innovation and future growth.
  • Operating cash flow of 190.89M provides strong 12.90x coverage of capital expenditure 14.79M, enabling organic growth.

Bear case

  • Operating cash flow of 190.89M barely covers its investment activities of (245.50M), with a coverage ratio of -0.78, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (245.50M) provide weak support for R&D spending of 74.74M, which is -3.28x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 264.77M provide limited coverage of acquisition spending of (8.94M), which is -29.63x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 190.89M shows concerning coverage of stock compensation expenses of 60.63M, with a 3.15 ratio indicating potential earnings quality issues.
  • Operating earnings of (187.02M) show weak coverage of depreciation charges of 31.23M, with a -5.99 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 3,563.59 Bn 33.97 12.13 60.56 Bn
2 ORCL Oracle Corp 561.87 Bn 36.43 9.21 124.39 Bn
3 PLTR Palantir Technologies Inc. 413.65 Bn 377.64 106.17 0.24 Bn
4 PANW Palo Alto Networks Inc 126.45 Bn 113.19 13.23 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 116.42 Bn -370.56 25.50 0.82 Bn
6 SNPS Synopsys Inc 86.06 Bn 64.60 12.20 14.29 Bn
7 NET Cloudflare, Inc. 62.78 Bn -609.27 31.18 3.50 Bn
8 FTNT Fortinet, Inc. 60.83 Bn 32.47 9.28 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.65 2.69
EV to Cash from Ops. EV/CFO 12.55 28.91
EV to Debt EV to Debt 2.99 19.83
EV to EBIT EV/EBIT -12.81 -9.95
EV to EBITDA EV/EBITDA 9.70 6.82
EV to Free Cash Flow [EV/FCF] EV/FCF 13.61 26.09
EV to Market Cap EV to Market Cap 1.30 0.36
EV to Revenue EV/Rev 1.92 -9.34
Price to Book Value [P/B] P/B 4.20 3.88
Price to Earnings [P/E] P/E -9.50 -10.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -70.02 -0.30
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.71
Dividend per Basic Share Div per Share (Qtr) 0.00 0.10
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.68
Interest Coverage Interest Coverage 0.00 -14.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 19.59 -408.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 60.74 226.39
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -7.27 25.27
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 242.24 47.48
EBIT Growth (1y) % EBIT 1y % (Qtr) -13.44 20.13
EBT Growth (1y) % EBT 1y % (Qtr) -13.44 14.16
EPS Growth (1y) % EPS 1y % (Qtr) -8.30 67.50
FCF Growth (1y) % FCF 1y % (Qtr) 761.05 296.60
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 33.16 46.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.86 0.67
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.00 1.22
Current Ratio Curr Ratio (Qtr) 0.00 2.59
Debt to Equity Ratio Debt/Equity (Qtr) 1.83 -0.96
Interest Cover Ratio Interest Cover Ratio 0.00 -14.20
Times Interest Earned Times Interest Earned 0.00 -14.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -12.50 -548.16
EBIT Margin % EBIT Margin % (Qtr) -15.01 -199.84
EBT Margin % EBT Margin % (Qtr) -15.01 -607.20
Gross Margin % Gross Margin % (Qtr) 42.40 51.88
Net Profit Margin % Net Margin % (Qtr) -15.50 -610.00