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CPI Card Group Inc. (PMTS)
:PMTS
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CPI Card Group
(NASDAQ:PMTS)
61Neutral
Positive Factors
Investments
CPI Card Group is making investments to cater to a broader closed-loop prepaid opportunity and is adding tech and capacity at its Indiana facility.
Market Position
CPI is the fourth largest global card manufacturer and the largest U.S.-based, indicating its strong market position.
Revenue Performance
CPI reported revenue of $125.1M, above consensus of $120.5M and driven by broad-based strength.
Negative Factors
Inventory Levels
Channel inventory demand is improving, with inventory levels at CPI's customers starting to normalize, lessening the headwinds to the top line.
Product Mix
Better operating leverage was overshadowed by gross margin softness resulting from a negative product mix.
Valuation
Shares trade at a significant discount to comps despite an EPS growth rate in line with the median peer group.
CPI Card Group (PMTS) vs. S&P 500 (SPY)
Market Cap
$278.77M
Dividend YieldN/A
Average Volume (3M)37.31K
Price to Earnings (P/E)15.0
Beta (1Y)1.49
Revenue Growth8.11%
EPS Growth-16.75%
CountryUS
Employees1,500
SectorFinancial
Sector Strength83
IndustryFinancial - Credit Services
Share Statistics
EPS (TTM)1.65
Shares Outstanding11,281,489
10 Day Avg. Volume36,348
30 Day Avg. Volume37,315
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.69
Price to Cash Flow (P/CF)3.10
P/FCF Ratio3.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$37.25Price Target Upside50.75% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
CPI Card Group Business Overview & Revenue Model
Company DescriptionCPI Card Group Inc., together with its subsidiaries, engages in the design, production, data personalization, packaging, and fulfillment of financial payment cards. It operates through Debit and Credit, and Prepaid Debit segments. The Debit and Credit segment produces financial payment cards and provides integrated card services to card-issuing banks. Its products include Europay, Mastercard, And Visa (EMV) and non-EMV financial payment cards and metal cards, as well as private label credit cards. This segment also provides on-demand services and various integrated card services, including card personalization and fulfillment, and instant issuance services. The Prepaid Debit segment primarily offers integrated card services comprising tamper-evident security packaging services to prepaid debit card providers. It also produces financial payment cards issued on the networks of the payment card brands. It serves issuers of debit and credit cards, Prepaid Debit Card program managers, community banks, credit unions, group service providers, and card transaction processors in the United States. The company was formerly known as CPI Holdings I, Inc. and changed its name to CPI Card Group Inc. in August 2015. CPI Card Group Inc. was incorporated in 2007 and is based in Littleton, Colorado.
How the Company Makes MoneyCPI Card Group generates revenue primarily through the sale of its payment card products and related services. The company's key revenue streams include the manufacturing and personalization of standard and advanced payment cards, including EMV chip and contactless cards. CPI Card Group also earns money by providing card personalization services, which involve the customization of cards with unique designs, logos, and cardholder information. Additionally, the company offers software solutions and support for instant issuance, allowing financial institutions to issue cards directly to customers at branch locations. Significant partnerships with banks, credit unions, and other financial service providers contribute to CPI Card Group's earnings by expanding its market reach and customer base.
CPI Card Group Financial Statement Overview
Summary
CPI Card Group shows strong revenue growth and operational efficiency with an income statement score of 72. However, its balance sheet is weak, with negative equity and high leverage, scoring 45. Cash flows are positive and improving, scoring 68, but balance sheet weaknesses are a concern.Income Statement
CPI Card Group has shown consistent revenue growth over the past years, with a 8.11% increase from 2023 to 2024. The gross profit margin for 2024 is 35.63%, showcasing strong profitability in its core operations. However, the net profit margin is relatively low at 4.06%, indicating potential areas for cost optimization. The EBIT margin stands at 13.06% and the EBITDA margin at 37.48%, reflecting solid operational efficiency.72
Positive
Balance Sheet
The company's balance sheet is concerning, with a negative stockholders' equity of -$35.62 million, indicating potential financial instability. The debt-to-equity ratio is not calculable due to negative equity, but the high total debt of $280.41 million against total assets of $349.66 million suggests leverage risks. Despite this, the equity ratio is negative, underlining a weak financial position and high reliance on debt financing.45
Neutral
Cash Flow
The company shows positive cash flow from operations, with a free cash flow growth of 56.61% from 2023 to 2024, which is a positive indicator. The operating cash flow to net income ratio is 2.22, highlighting strong cash earnings. However, the free cash flow to net income ratio is 2.22, suggesting that cash generation is in line with accounting profits but could be improved.68
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 480.60M | 444.55M | 475.75M | 375.12M | 312.19M | Gross Profit |
| 171.22M | 155.49M | 175.77M | 141.43M | 110.31M | EBIT |
| 62.79M | 61.59M | 79.13M | 59.46M | 38.39M | EBITDA |
| 79.21M | 77.31M | 93.65M | 74.56M | 55.11M | Net Income Common Stockholders |
| 19.52M | 23.98M | 36.54M | 15.94M | 16.13M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 33.54M | 12.41M | 11.04M | 20.68M | 57.60M | Total Assets |
| 349.66M | 293.68M | 296.67M | 268.14M | 266.15M | Total Debt |
| 280.40M | 272.31M | 291.22M | 303.63M | 336.71M | Net Debt |
| 246.86M | 259.90M | 280.18M | 282.94M | 279.11M | Total Liabilities |
| 385.28M | 345.62M | 378.74M | 389.16M | 404.19M | Stockholders Equity |
| -35.62M | -51.94M | -82.08M | -121.02M | -138.04M |
| Cash Flow | Free Cash Flow | |||
| 43.31M | 27.64M | 13.47M | 10.15M | 14.92M | Operating Cash Flow |
| 43.31M | 34.04M | 31.34M | 20.23M | 22.01M | Investing Cash Flow |
| -9.22M | -6.22M | -17.77M | -9.92M | -7.09M | Financing Cash Flow |
| -12.96M | -26.44M | -23.16M | -47.23M | 23.98M |
CPI Card Group Technical Analysis
Negative
24.71
Price Trends
28.75
Negative
29.92
Negative
28.16
Negative
Market Momentum
-1.47
Positive
39.26
Neutral
31.25
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PMTS, the sentiment is Negative. The current price of 24.71 is below the 20-day moving average (MA) of 27.41, below the 50-day MA of 28.75, and below the 200-day MA of 28.16, indicating a bearish trend. The MACD of -1.47 indicates Positive momentum. The RSI at 39.26 is Neutral, neither overbought nor oversold. The STOCH value of 31.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PMTS.
CPI Card Group Risk Analysis
CPI Card Group disclosed 40 risk factors in its most recent earnings report. CPI Card Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
CPI Card Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
84 Outperform | $504.03M | 2.29 | 17.96% | 3.38% | 17.07% | -8.81% | |
77 Outperform | $1.99B | 6.10 | 16.47% | 3.09% | 2.51% | 7.06% | |
63 Neutral | $13.51B | 9.48 | 9.36% | 4.87% | 16.09% | -8.30% | |
61 Neutral | $278.77M | 14.98 | -36.18% | ― | 8.11% | -16.75% | |
61 Neutral | $411.06M | ― | -3.08% | ― | 14.82% | -461.78% | |
52 Neutral | $3.80B | ― | -20.27% | ― | 24.50% | 49.38% | |
45 Neutral | $218.31M | ― | -6.43% | ― | -81.66% | -214.54% |
* Financial Sector Average
Performance Comparison
PMTS
CPI Card Group
24.71
7.28
41.77%
GDOT
Green Dot
7.58
-0.59
-7.22%
YRD
Yiren Digital
5.77
1.13
24.35%
AHG
Akso Health Group Sponsored ADR
1.05
0.23
28.05%
FINV
FinVolution Group
7.96
3.25
69.00%
UPST
Upstart Holdings
39.96
17.42
77.28%
CPI Card Group Earnings Call Summary
Earnings Call Date: Mar 4, 2025 | % Change Since: -22.49% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive sentiment with significant growth in the prepaid segment, strong sales growth overall, successful debt refinancing, and strong free cash flow. However, there are concerns with declining EBITDA margins, higher SG&A and interest expenses, and ongoing channel inventory challenges.Highlights
Exceptional Prepaid Business Performance
The prepaid business grew by 26% for the year, exceeding $100 million in net sales driven by strong demand for fraud-prevention solutions and expansion into the healthcare payment solutions vertical.
Strong Sales Growth
Net sales increased by 22% in the fourth quarter. The prepaid segment saw a 59% increase, and the debit and credit segment increased by 12%. Overall, net sales rose by 8% for the full year.
Successful Debt Refinancing and Share Repurchase
CPI Card Group refinanced its debt, issuing $285 million of new senior notes extending maturities to 2029, and repurchased $9 million of stock at an average price of over $18.
Strong Free Cash Flow
The company generated over $34 million in free cash flow for the full year despite higher capital spending.
Eco-Focused Product Success
Sales of eco-focused credit, debit, and prepaid cards exceeded 350 million units since launch, with prepaid contributing over 200 million.
Lowlights
Decline in Adjusted EBITDA Margin
Adjusted EBITDA margin declined from 20.1% to 19.1% for the full year, primarily due to increased employee performance-based incentive compensation expense.
Challenges with Channel Inventory
Channel inventory levels for credit and debit cards remain above historical levels, impacting growth potential.
Higher SG&A Expenses
SG&A expenses increased by $14.5 million due to increased employee performance-based incentive compensation, investments in personnel, and higher medical costs.
Higher Interest and Debt Refinancing Costs
Interest expense increased by $7.2 million and the company incurred $8.8 million in pretax debt refinancing costs.
Company Guidance
During the CPI Card Group's fourth quarter 2024 earnings call held on March 4, 2025, the company provided guidance for the fiscal year 2025, projecting mid to high single-digit net sales growth, primarily driven by their debit and credit business. The company expects adjusted EBITDA growth in similar mid to high single digits, supported by increased investments in innovation and diversification strategies. It anticipates strong free cash flow and aims to reduce its net leverage ratio below 3.0 times by year-end. CPI Card Group also highlighted the success of its prepaid segment, which grew by 26% for the year, exceeding $100 million in net sales, driven by strong demand for fraud prevention solutions and healthcare payment solutions. The company has already sold over 350 million eco-focused card and packaging solutions and plans to further penetrate the closed-loop prepaid market in the US. Additionally, the company completed significant capital structure actions, including refinancing debt and a secondary share offering, to enhance market positioning and shareholder value.CPI Card Group Corporate Events
Stock BuybackBusiness Operations and StrategyFinancial Disclosures
CPI Card Group Reports Strong Q4 2024 Results
Positive
Mar 4, 2025
CPI Card Group Inc. reported strong financial results for the fourth quarter and full year of 2024, with a 22% increase in fourth-quarter net sales to $125 million and a 148% rise in net income to $7 million. The company experienced significant growth in its prepaid debit segment, which saw a 26% increase in net sales, and expanded its market presence with new digital solutions. Looking ahead to 2025, CPI projects mid-to-high single-digit growth in net sales and Adjusted EBITDA, driven by its Debit and Credit segment and investments in digital solutions. The company also completed several key capital actions in 2024, including debt refinancing and stock repurchases, to enhance shareholder value.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.