CPI Card Group: Mispriced Equity Explained

Summary

• Management reiterated guidance that implies PMTS is trading at 8x (EPS) vs S&P 22x, but the market does not believe the guidance.
• We believe the guidance because the business is a consumable product meaning customers can delay but not eliminate purchases.
• PMTS cautioned the second quarter is witnessing a delay in buying driven by bank turmoil, which we believe abates due to the idiosyncratic nature of the recent bank failures.
• The company’s business is driven by the number of bank accounts, not number of banking institutions.
• PMTS has made it into the preliminary round for Russell 2000 inclusion, which should generate considerable share demand.

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Summary

CPI Card Group Inc., (NASDAQ:PMTS) is one of the largest credit and debit card manufacturers in the United States. The company's financial performance has improved due to market share gains, industry growth, and ASP expansion. The company's fundamentals are stable with

Analyst’s Disclosure:I/we have a beneficial long position in the shares of PMTS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.