The Fintech industry has immense growth potential over the long term due to the increasing adoption of advanced technologies for digital transactions. According to The Express Wire report, the Fintech market is expected to grow at an 8.6% CAGR over the next three years…
However, concerns related to data security have been dampening the industry’s growth. With increasing cyberattacks, consumers are wary of using fintech solutions, especially since they typically involve confidential information. Investors’ pessimism toward fintech stocks is evident in Global X FinTech ETF’s (FINX) 2.5% loss over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 3.9% returns.
So, even though the long-term prospects for the fintech industry look promising, some fundamentally weak companies that are trading at lofty valuations could witness a price pullback in the near term. Wall Street analysts expect FactSet Research Systems Inc. (FDS – Get Rating) and Lemonade, Inc. (LMND – Get Rating) to continue declining in the near term. So, these two stocks are best avoided now.
FDS in Norwalk, Conn., provides integrated financial information and analytical applications to deliver insight and information through the workflow solutions of research, analytics and trading, content and technology solutions, and wealth. It serves a range of financial professionals, including portfolio managers, investment bankers, wealth advisors, and corporate clients.
FDS’ adjusted operating income decreased 5.2% year-over-year to $126.46 million in its fiscal third quarter, ended May 31, 2021. Its free cash flow decreased 13.1% year-over-year to $121.66 million. Its adjusted net income came in at $104.81 million, which represents a 4.8% year-over-year decrease. The company’s adjusted EPS was $2.72, down 4.9% year-over-year.
In terms of forward P/B, FDS’ 12.21x is 990% higher than the industry average of 1.12x. In terms of forward non-GAAP PEGl, the stock’s 4.34x is 349.4% higher than the 0.97x industry average.
Analysts expect FDS’ EPS to come in at $2.73 for the current quarter, ending August 31, 2021, representing a 5.2% year-over-year decrease. The stock has lost 4.3% over the past year to close yesterday’s trading session at $339.93. Wall Street analysts expect the stock to hit $321.33 in the near term, indicating a potential 5.5% decline.
FDS’ weak fundamentals are reflected in its POWR Ratings. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. It has a D grade for Growth.
LMND provides various insurance products in the United States and Europe, covering stolen or damaged property and personal liability. The company also offers…
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