Affirm Holdings, Inc. Fundamental Analysis (NASDAQ: AFRM)
Affirm Holdings, Inc. Fundamental Analysis (NASDAQ: AFRM)
Affirm Holdings, Inc. (NASDAQ: AFRM) shows strong financial fundamentals with a PE ratio of 11.50, profit margin of 44.60%, and ROE of 43.38%. The company generates $3.9B in annual revenue with strong year-over-year growth of 38.80%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 70.7/100 based on profitability, valuation, growth, and balance sheet metrics. The B grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze AFRM's fundamental strength across five key dimensions:
Efficiency Score
ExcellentAFRM demonstrates superior asset utilization.
Valuation Score
ExcellentAFRM trades at attractive valuation levels.
Growth Score
ModerateAFRM shows steady but slowing expansion.
Financial Health Score
ModerateAFRM shows balanced financial health with some risks.
Profitability Score
ExcellentAFRM achieves industry-leading margins.
Key Financial Metrics
Is AFRM Expensive or Cheap?
P/E Ratio
AFRM trades at 11.50 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, AFRM's PEG of 0.02 indicates potential undervaluation.
Price to Book
The market values Affirm Holdings, Inc. at 4.06 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 9.17 times EBITDA. This is generally considered low.
How Well Does AFRM Make Money?
Net Profit Margin
For every $100 in sales, Affirm Holdings, Inc. keeps $44.60 as profit after all expenses.
Operating Margin
Core operations generate 17.11 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $43.38 in profit for every $100 of shareholder equity.
ROA
Affirm Holdings, Inc. generates $12.22 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Affirm Holdings, Inc. produces operating cash flow of $930.35M, showing steady but balanced cash generation.
Free Cash Flow
Affirm Holdings, Inc. generates strong free cash flow of $714.81M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $2.39 in free cash annually.
FCF Yield
AFRM converts 4.01% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
11.50
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.02
vs 25 benchmark
P/B Ratio
Price to book value ratio
4.06
vs 25 benchmark
P/S Ratio
Price to sales ratio
4.52
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.79
vs 25 benchmark
Current Ratio
Current assets to current liabilities
10.28
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.43
vs 25 benchmark
ROA
Return on assets percentage
0.12
vs 25 benchmark
ROCE
Return on capital employed
0.05
vs 25 benchmark
How AFRM Stacks Against Its Sector Peers
| Metric | AFRM Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 11.50 | 20.35 | Better (Cheaper) |
| ROE | 43.38% | 610.00% | Weak |
| Net Margin | 44.60% | 641.00% | Weak |
| Debt/Equity | 1.79 | 0.91 | Weak (High Leverage) |
| Current Ratio | 10.28 | 799.65 | Strong Liquidity |
| ROA | 12.22% | -77.00% (disorted) | Strong |
AFRM outperforms its industry in 3 out of 6 key metrics, particularly excelling in ROA, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Affirm Holdings, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
404.55%
Industry Style: Value, Dividend, Cyclical
High GrowthEPS CAGR
136.95%
Industry Style: Value, Dividend, Cyclical
High GrowthFCF CAGR
901.35%
Industry Style: Value, Dividend, Cyclical
High Growth