CPI Card Group Inc. (PMTS) Stock Analysis and Metrics

Sector: Financial Services Industry: Credit Services CIK: 0001641614

Market Cap 177.29 Mn

P/B -6.91

P/E 12.34

P/S 0.34

ROIC (Qtr) 11.41

Div Yield % 0.00

Rev 1y % (Qtr) 10.59

Total Debt (Qtr) 308.43 Mn

Debt/Equity (Qtr) -12.02

About

CPI Card Group Inc., a prominent company in the payments technology industry, is publicly traded on the stock market under the symbol PMTS. The organization specializes in the production and personalization of Financial Payment Cards, including debit, credit, and prepaid debit cards, for a variety of clients, such as financial institutions, fintechs, and government agencies. CPI Card Group Inc. is an extensive player in the payments technology industry, with operations primarily based in the United States. The company's main business activities...

CPI Card Group Inc., a prominent company in the payments technology industry, is publicly traded on the stock market under the symbol PMTS. The organization specializes in the production and personalization of Financial Payment Cards, including debit, credit, and prepaid debit cards, for a variety of clients, such as financial institutions, fintechs, and government agencies.

CPI Card Group Inc. is an extensive player in the payments technology industry, with operations primarily based in the United States. The company's main business activities revolve around the creation and customization of Financial Payment Cards, which are utilized by numerous customers for different purposes. CPI's product offerings include EMV Financial Payment Cards, non-EMV Financial Payment Cards, card data personalization and fulfillment, instant card issuance systems and services, digital solutions, and tamper-evident secure packaging solutions.

CPI Card Group Inc.'s product portfolio includes EMV cards, contactless cards, and dual-interface EMV cards, which are tailored to cater to the diverse needs of its clientele. The company's Debit and Credit segment primarily focuses on producing Financial Payment Cards and providing integrated card services, including digital services, to card-issuing financial institutions primarily in the United States. This segment offers a variety of products, including EMV cards, contactless cards, and dual-interface EMV cards, which are designed to meet the needs of its customers.

On the other hand, CPI's Prepaid Debit segment primarily provides integrated prepaid card services to prepaid debit card program managers primarily in the United States. This segment offers a range of products and services, including tamper-evident secure packaging solutions, designed to meet the needs of its customers. The Other segment includes corporate expenses that are not directly related to the company's core business activities.

CPI Card Group Inc. has established a leading position in the Financial Payment Card solutions market through its strong relationships with customers, quality products, innovation, and supply-chain management. The company's competitive advantages include its comprehensive end-to-end card solutions, network of high-security production facilities, and experienced leadership team.

CPI's customers include some of the largest issuers of debit and credit cards in the United States, the largest prepaid debit card program managers, fintechs, and government agencies. The company has a diverse customer base, with nearly two-thirds of its net sales coming from its top ten direct customers, which include certain Group Service Providers.

Price action

Investment thesis

Bull case

Tangible assets of 336.67M provide exceptional 93.47x coverage of deferred revenue 3.60M, showing strong service capability backing.
Operating cash flow of 46.57M provides strong 12.93x coverage of deferred revenue 3.60M, indicating service delivery capability.
Tangible assets of 336.67M provide robust 6.34x coverage of other current liabilities 53.07M, indicating strong asset backing.
Operating cash flow of 46.57M fully covers other non-current liabilities 38.23M by 1.22x, showing strong long-term stability.
Operating cash flow of 46.57M provides strong 14.45x coverage of tax liabilities 3.22M, showing excellent fiscal position.

Bear case

Operating cash flow of 46.57M barely covers its investment activities of (61.19M), with a coverage ratio of -0.76, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
With cash reserves of 15.96M against inventory of 85.13M, the 0.19 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
Cash reserves of 15.96M provide limited coverage of acquisition spending of (42.44M), which is -0.38x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
Operating earnings of 51.95M show weak coverage of depreciation charges of 20.08M, with a 2.59 ratio indicating high capital intensity and potential reinvestment needs.
High depreciation of 20.08M relative to operating cash flow of 46.57M, which is 0.43x suggests significant maintenance capital requirements affecting free cash flow.

Peer comparison

Companies in the Credit Services

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	V	Visa Inc.	685.45 Bn	34.17	17.14	25.17 Bn
2	MA	Mastercard Inc	520.38 Bn	36.52	16.53	18.98 Bn
3	AXP	American Express Co	266.36 Bn	25.27	4.08	59.23 Bn
4	COF	Capital One Financial Corp	111.93 Bn	102.41	3.87	51.48 Bn
5	PYPL	PayPal Holdings, Inc.	58.35 Bn	11.87	1.78	11.28 Bn
6	SYF	Synchrony Financial	32.00 Bn	9.16	3.32	14.43 Bn
7	SOFI	SoFi Technologies, Inc.	29.56 Bn	46.17	8.90	2.81 Bn
8	ALLY	Ally Financial Inc.	14.44 Bn	52.52	1.83	20.63 Bn

Industry comparisons

Current Valuation	Value	Ind Avg
EV to Assets EV to Assets	1.16	1.03
EV to Cash from Ops. EV/CFO	10.12	4.72
EV to Debt EV to Debt	1.53	2.99
EV to EBIT EV/EBIT	9.07	-246.63
EV to EBITDA EV/EBITDA	6.51	-62.30
EV to Free Cash Flow [EV/FCF] EV/FCF	16.98	7.33
EV to Market Cap EV to Market Cap	2.66	10.21
EV to Revenue EV/Rev	0.91	10.01
Price to Book Value [P/B] P/B	-6.91	3.47
Price to Earnings [P/E] P/E	12.34	13.86

Dividend Metrics	Value	Ind Avg
Dividend Coverage Ratio Div Coverage (Qtr)	0.00	1.59
Dividend Payout Ratio % Div Payout % (Qtr)	0.00	2.22
Dividend per Basic Share Div per Share (Qtr)	0.00	0.68
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr)	0.00	4.82
Interest Coverage Int. cover (Qtr)	1.61	-64.96

Growth Metrics	Value	Ind Avg
Capex Growth (1y) % Capex 1y % (Qtr)	-315.97	-85.80
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr)	8.91	7.91
Dividend Growth (1y) % Div 1y % (Qtr)	0.00	5.47
EBIAT Growth (1y) % EBIAT 1y % (Qtr)	-6.24	16.85
EBITDA Growth (1y) % EBITDA 1y % (Qtr)	-0.97	-0.69
EBIT Growth (1y) % EBIT 1y % (Qtr)	-3.37	33.67
EBT Growth (1y) % EBT 1y % (Qtr)	-4.32	1.73
EPS Growth (1y) % EPS 1y % (Qtr)	-7.25	-64.54
FCF Growth (1y) % FCF 1y % (Qtr)	16.06	129.37
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr)	0.25	18.73

Liquidity Ratios	Value	Ind Avg
Asset Utilization Ratio Asset Util Ratio (Qtr)	1.27	0.23
Cash Payout Ratio Cash Payout (Qtr)	0.00	0.05
Cash Ratio Cash Ratio (Qtr)	0.19	0.46
Current Ratio Curr Ratio (Qtr)	2.56	1.05
Debt to Equity Ratio Debt/Equity (Qtr)	-12.02	4.88
Interest Cover Ratio Int Coverage (Qtr)	1.61	-64.96
Times Interest Earned Times Interest Earned (Qtr)	1.61	-64.96

Profitability	Value	Ind Avg
EBITDA Margin % EBITDA Margin % (Qtr)	14.00	-17.83
EBIT Margin % EBIT Margin % (Qtr)	10.08	125.65
EBT Margin % EBT Margin % (Qtr)	3.84	-9.92
Gross Margin % Gross Margin % (Qtr)	31.90	72.34
Net Profit Margin % Net Margin % (Qtr)	2.80	-23.76

CPI Card Group Inc. (NASDAQ: PMTS)

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