Shares of financial plan specialist Affirm, known for its buy-now-pay-later plans, are highly sought by Wall Street investors, in part because of strong profit growth. You wouldn't know it though, by its recent stock performance. Some on Wall Street think that may be about to change.
On Tuesday the Relative Strength (RS) Rating for Affirm stock jumped 10 points, with an upgrade from 74 to 84. The upgraded 84 RS Rating shows that Affirm stock tops 84% of all stocks for price performance for the past year. Market research shows that the best-performing stocks often have an RS Rating of at least 80 in the early stages of their moves.
Affirm Stock Reversed To Robust Earnings
San Francisco-based Affirm stock reversed from a 6% drop in EPS for the June 2023-ended quarter to report earnings growth of 34% the next quarter, then gains of 51% and 38% last quarter.
Revenue growth picked up every quarter for the past year, rising from 22% to 37%, 48% and 51% last quarter. With powerful growth like that you'd think its stock would be rising sharply. Not so much so far.
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Affirm stock peaked at 52.48 in late December 2023. It's slid since then and traded around 29 Tuesday afternoon. However, although the average investor hasn't seen a change for the better in the company's fundamentals, Wall Street has. Affirm has a B- Accumulation/Distribution Rating on an A+ to E scale.
The B- rating shows that institutional investors like ETFs and university funds are fairly heavy buyers of Affirm stock. That makes Affirm stock a watchlist candidate. Also, it rose above its moving 50-day average on Monday, a bullish indicator.
However, it's conviction buyers that earned it the B- rating, not all investors. The number of funds holding Affirm stock fell from 470 in the March-ended quarter to 419 in the June quarter. Look for the number of funds holding Affirm to start going up again.
Up In 7 Of Last 9 Trading Sessions
Affirm stock has risen more than 5% past a 25.63 entry in a second-stage cup without handle, meaning it's now out of a proper buy range. Look for the stock to create a new buying opportunity like a three-weeks tight or pullback to the 50-day or 10-week line.
Affirm was down more than 2% Tuesday at just above 29 in afternoon trading, up about 7% from a 22.25 low on Aug. 5.
Affirm stock has a weak 46 Earnings Per Share Rating, reflecting poor earnings in prior years. Its 56 Composite Rating shows it tops a majority of all other stocks overall. But it needs improving. The best growth stocks typically have a 90 or higher Composite. Its relative strength line, another gauge of a stock's strength vs. the overall market, had trended upward since Aug. 5 until it dipped Tuesday.
Affirm stock holds the No. 24 rank among its peers in the Finance-Card/Payment Processing industry group. Shift4 Payments, Paymentus Holdings and PagSeguro Digital are among the top 5 highly rated stocks in the group.
The exclusive Relative Strength Rating from Investor's Business Daily measures price action with a 1 (worst) to 99 (best) score. The rating shows how a stock's price behavior over the last 52 weeks stacks up against all the other stocks in our database.
Please follow James DeTar on X, formerly known as Twitter, @JimDeTar
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