MoneyLion Inc. ML will announce its second quarter 2024 results on August 6, before the market opens.
The Zacks Consensus Estimate for the bottom line in the reported quarter is a loss of one cent, representing a 97.6% reduction in loss from the year-ago quarter. The consensus estimate for revenue is $127.4 million, representing year-over-year growth of 19.6%. There were no changes or revisions to analyst estimates in the past 30 days.
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The company has a history of impressive earnings surprises. Earnings have exceeded the Zacks Consensus Estimate in all of the last four quarters, with an average earnings surprise of 116.4%.
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Exceeding Q2 earnings expectations seems unlikely
Our proven model is not conclusively predicting that ML will beat expectations this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. With our Earnings ESP filter, you can uncover the best stocks to buy or sell before they’re reported.
ML has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Growth in customers, new customers and products expected
MoneyLion’s business model allows the company to optimize its technology and leverage proprietary data sets through various customer insights, enabling the company to drive technological innovation and expand customers, loans and products. We expect these strengths to gain traction in the quarter, allowing the company to grow its revenues and profits.
The share is in the correction phase
ML has gained 26.6% in the last six months, while it has fallen 13.2% in the last three months and 13% in the last month. This price dynamic suggests that the stock is in a correction phase. The stock’s recent performance is in line with its peers. Intuit Inc. INTU fell by 6.7%, while Ally Financial Inc. ALLY is up just 2% in the last month.
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A steep decline has recently pushed ML stock into the undervalued zone. If we look at the price to earnings ratio for the next 12 months, ML shares are currently trading at 16.09 times forward earnings, which is below the industry average of 21.86. Based on the price to sales ratio for the next 12 months, ML is currently trading at 1.1 times forward earnings, which is way below the industry average of 6.78.
Investment considerations
MoneyLion’s marketplace-focused strategy and strong network of corporate partners drive cross-selling opportunities and revenue diversification. This approach enhances the company’s ability to deliver personalized financial decisions, detailed context, and community-driven insights, driving repeat usage.
MoneyLion has effectively integrated the strengths of marketplace and direct-to-consumer fintech business models. As a marketplace, the company can quickly scale its product offering and develop a network effect and information advantage that appeals to more buyers and sellers. The direct-to-consumer aspect allows MoneyLion to maintain close and direct relationships with its customers. In its enterprise business, ML continues to grow channel partners and vertically integrate with product partners, establishing itself as a key customer acquisition and monetization partner within the financial services ecosystem.
Wait for a better entry point
While MoneyLion’s effective business model, strong revenue and profit growth prospects, and growing customer base all contribute to its potential for continued success, proper market timing is critical to maximizing investment returns.
The stock could be subject to further correction, especially if ML seems unable to beat earnings estimates. We suggest that rather than buying the stock ahead of earnings estimates, it could be a smart strategy to wait for a more favorable entry point.
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