Mitrade Insights is dedicated to providing investors with rich, timely and most valuable financial information to help investors grasp the market situation and find timely trading opportunities.

2021

Best News & Analysis Provider

FxDailyInfo

2022

Best Forex Educational Resources Global

International Business Magazine

Insights

News

Why CPI Card Group Stock Popped 12% Today

Source The Motley Fool

CPI Card Group (NASDAQ: PMTS) stock rose 12.2% through 12:30 p.m. ET Tuesday despite reporting only mixed results in its Q3 earnings report this morning.

On the plus side, the manufacturer of credit and debit cards for issuance by banks beat analyst revenue expectations, reporting $124.8 million in sales where $117.1 million had been expected. At the same time, CPI's profits were only $0.11 per share, far less than the predicted $0.51.

CPI Q3 earnings

Sales surged 18% year over year, with CPI reporting strong sales of both debit and credit cards, and prepaid cards as well. Earnings, however, tumbled 67% as the company incurred $8.8 million in costs to refinance its debt.

As CPI explained, it redeemed its $268 million worth of senior secured notes (due in 2026 and paying 8.6% interest), and replaced them with $285 million in senior secured notes (due in 2029) paying 10% interest. The company also entered into a $75 million revolving credit facility giving it additional access to capital as needed.

The net effect of these moves will be to increase interest costs for CPI going forward -- but also to push out the due date for its debt by three years. Additionally, CPI noted that its majority stockholder sold 1.4 million shares of stock onto the public market, reducing its stake from 56% to 43% of the company, such that CPI no longer has a controlling shareholder.

Is CPI Card stock a buy?

Turning to guidance, CPI said sales will grow in the mid- to high single digits this year (i.e., faster than previously expected), and with higher-than-expected earnings before interest, taxes, depreciation, and amortization (EBITDA) as well. Free cash flow will be "slightly below the 2023 level," versus a prior prediction of nearly a 50% reduction -- also a big improvement.

Roughly speaking, investors might therefore expect free cash flow of perhaps $25 million this year -- a guess that, if correct, could value the stock at as little as 11 times FCF. Not bad, in other words, for a company now growing sales at 18%.

Should you invest $1,000 in Cpi Card Group right now?

Before you buy stock in Cpi Card Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Cpi Card Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $833,729!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of November 4, 2024

Rich Smith has positions in Cpi Card Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.

Recommended Articles

Fed hike odds near 90% into Wednesday's decision — how to trade the dollar, gold and the S&P 500 A 0.3% monthly core CPI print has lifted the market-implied probability of a 25bp Fed hike on 16 September to roughly 86.5% ~ 90%, which would be the first increase since July 2023. Here is the decision timeline, the pricing versus the forecasts, both scenarios, and the key levels for the dollar, gold and the S&P 500.

Author Suzie

Sep 14, Mon

A 0.3% monthly core CPI print has lifted the market-implied probability of a 25bp Fed hike on 16 September to roughly 86.5% ~ 90%, which would be the first increase since July 2023. Here is the decision timeline, the pricing versus the forecasts, both scenarios, and the key levels for the dollar, gold and the S&P 500.

Silver breaks $64 as precious metals rebound — can gold hold the $4,280 line into the Fed decision?Silver has climbed back above $64 an ounce for the first time this week, leading a broad rebound across precious metals hours before the Federal Reserve delivers what is expected to be its first rate hike since 2023. Spot silver was last at $64.64, up 1.49% on the day, while gold reclaimed $4,300 and platinum and palladium both advanced. The question now is whether the bounce is a genuine turn — or a pause before the Fed's dot plot decides the next move.

Author Suzie

Sep 16, Wed

Silver has climbed back above $64 an ounce for the first time this week, leading a broad rebound across precious metals hours before the Federal Reserve delivers what is expected to be its first rate hike since 2023. Spot silver was last at $64.64, up 1.49% on the day, while gold reclaimed $4,300 and platinum and palladium both advanced. The question now is whether the bounce is a genuine turn — or a pause before the Fed's dot plot decides the next move.

Bitcoin falls below $75,000 as the CLARITY Act fails in the Senate — what the vote means for crypto The US Senate blocked the Digital Asset Market CLARITY Act in a 49-50 procedural vote, sending Bitcoin briefly below $75,000 — its biggest one-day drop since June. Ethereum fell more than 8%, Coinbase slid 10% and $75 billion of crypto market value evaporated. Here is what the vote was, why it failed, and the levels that matter now.

Author Suzie

Sep 16, Wed

The US Senate blocked the Digital Asset Market CLARITY Act in a 49-50 procedural vote, sending Bitcoin briefly below $75,000 — its biggest one-day drop since June. Ethereum fell more than 8%, Coinbase slid 10% and $75 billion of crypto market value evaporated. Here is what the vote was, why it failed, and the levels that matter now.

Dow drops 631 points as the Fed hikes — but futures are rebounding: what's next for US stocks?The Dow fell 631 points and the S&P 500 closed below 7,600 after the Fed hiked rates for the first time since 2023, with the dot plot showing 16 of 18 officials expect more tightening. Asia-session futures are already recovering — here are the levels and analyst views that decide whether 7,500 holds.

Author Irene Q.

23 hours ago

The Dow fell 631 points and the S&P 500 closed below 7,600 after the Fed hiked rates for the first time since 2023, with the dot plot showing 16 of 18 officials expect more tightening. Asia-session futures are already recovering — here are the levels and analyst views that decide whether 7,500 holds.

Dollar index tops 100 for the first time since July as the Fed's hawkish dot plot sinks in The U.S. dollar index broke back above 100 for the first time since 31 July after the Fed delivered its first rate hike since 2023, with the dot plot showing 16 of 18 officials expect at least one more increase this year. Here are the levels that matter for DXY, the currencies feeling it most, and what to watch next.

Author Irene Q.

Yesterday 02: 45

The U.S. dollar index broke back above 100 for the first time since 31 July after the Fed delivered its first rate hike since 2023, with the dot plot showing 16 of 18 officials expect at least one more increase this year. Here are the levels that matter for DXY, the currencies feeling it most, and what to watch next.

Popular Symbols