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Affirm (AFRM) Survey Hints Canadians Eyeing Major Purchases

Affirm Holdings, Inc. AFRM recently released findings from its survey of 2,000 Canadians, signaling that they are more confident about their finances compared with the economy. While many reports indicate that Canadians might cut their expenses, this survey highlights that the majority (82%) of people are planning to make a major purchase in the near future.

The report highlights that 94% and 90% of Gen Z and Millennials plan to make a major purchase in the coming months compared with 82% and 72% of Gen X and Baby Boomers, respectively. High prices were most often cited as a challenge by Canadians. This survey highlights an important aspect, which is the rising need for flexible payment options.

As demand for flexible payment options related to major purchases like travel, car among others is rapidly increasing, AFRM’s top line should benefit as a result. AFRM expects fiscal 2024 revenues, as a percentage of GMV, to expand 65 bps from the fiscal 2023 level.

The majority of consumers mentioned an uncertain economy, high prices, and not having enough money as top challenges. 58% of customers expect their payment options to be more transparent, and nearly 50% demand improved flexibility. AFRM’s pay-over-time options are highly transparent with no hidden fees, which should help it win and retain customers.

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Affirm often resorts to partnerships to grow its network of more than 279,000 merchants. The massive network includes merchants in Canada like Apple, Samsung, Browns Shoes, Amazon and CheapOair. Increased active merchants, gross merchandise volume and transactions should aid AFRM’s results.

Affirm would benefit from the rising demand for BNPL services if it maintains a consistent merchant discount rate, introduces new offerings to drive organic growth and captures more market share with partnerships. However, high competition from legacy brands and new entrants should be a concern.

Shares of Affirm have surged 92.2% in the past six months compared with the industry’s 8.3% growth. AFRM currently carries a Zacks Rank #3 (Hold).

Zacks Investment Research
Zacks Investment Research


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Stocks to Consider

Some better-ranked stocks in the Business Services space are SPX Technologies, Inc. SPXC, CRA International, Inc. CRAI and Barrett Business Services, Inc. BBSI. While SPX Technologies sports a Zacks Rank #1 (Strong Buy), CRA International and Barrett Business Services carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of SPX Technologies outpaced estimates in three of the last four quarters and matched the mark once, the average beat being 23.2%. The Zacks Consensus Estimate for SPXC’s 2024 earnings suggests an improvement of 16.7% from the 2023 reported figure. The consensus mark for revenues suggests growth of 13.1% from the 2023 figure. The consensus mark for SPXC’s 2024 earnings has moved 5.5% north in the past 60 days.

CRA International’s earnings outpaced estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 8.1%. The Zacks Consensus Estimate for CRAI’s 2024 earnings suggests an improvement of 7.1% from the 2023 reported figure. The consensus mark for revenues suggests growth of 4.8% from the 2023 figure. The consensus mark for CRAI’s 2024 earnings has moved 1.9% north in the past seven days.

The bottom line of Barrett Business Services outpaced estimates in each of the last four quarters, the average beat being 77.7%. The Zacks Consensus Estimate for BBSI’s 2024 earnings suggests an improvement of 5.3% from the 2023 reported figure. The same for revenues suggests growth of 6.8% from the 2023 number. The consensus mark for BBSI’s 2024 earnings has moved 1.4% north in the past 60 days.

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Charles River Associates (CRAI) : Free Stock Analysis Report

Barrett Business Services, Inc. (BBSI) : Free Stock Analysis Report

SPX Technologies, Inc. (SPXC) : Free Stock Analysis Report

Affirm Holdings, Inc. (AFRM) : Free Stock Analysis Report

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Zacks Investment Research