The business software market is being driven by several key factors, including the growing adoption of digitalization by businesses, advancements in cloud technology, the rapid unification of multichannel touchpoints into a single platform, effective management of company resources, and the increasing demand for analyzing large volumes of business data to generate insights that can enhance revenue.
Additionally, the global shift toward digital payments mainly drives the payment processing solutions market. The convenience and security of online payment systems are drawing businesses and consumers alike.
Moreover, the growth of e-commerce and increasing smartphone usage are boosting the demand for efficient payment solutions. As a result, the market is projected to grow at a CAGR of 12.1% to reach $156.60 billion by 2030.
Against this backdrop, let’s compare two payment solution stocks, Marqeta, Inc. (MQ) and BILL Holdings, Inc. (BILL), to determine which is a better payment solution stock.
The Case for Marqeta, Inc. Stock
With a $2.74 billion market cap, Marqeta, Inc. (MQ) is a cloud-based open application programming interface platform that delivers card issuing and transaction processing services. It offers its solutions in various verticals, including financial services, on-demand services, expense management, and e-commerce enablement, as well as buy now, pay later.
MQ’s stock has plunged 12.4% over the past six months to close the last trading session at $5.39.
In terms of forward EV/Sales, MQ is trading at 3.11x, 1.9% higher than the industry average of 3.17x. MQ’s trailing-12-month CAPEX/Sales of 0.49% is 73.6% lower than the industry average of 1.84%.
In the fiscal second quarter that ended June 30, 2024, MQ’s net revenue plunged 46% year-over-year to $125.27 million, while its net income stood at $119.11 million. Moreover, its net income per share was $0.23, and adjusted EBITDA was negative $1.82 million.
Analysts expect MQ’s revenue for the third quarter (ending September 2024) to increase 17.5% year-over-year to $127.90 million. The company’s loss per share for the same quarter is expected to rise 47.2% year-over-year to $0.05.
MQ’s bleak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, equating to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a D grade for Quality, Value, and Stability. Within the Software - Business industry, MQ is ranked #38 out of 39 stocks.
In addition to the POWR Ratings I’ve just highlighted, you can see MQ’s ratings for Growth, Momentum, and Sentiment here.
The Case for BILL Holdings, Inc. Stock
Valued at $5.46 billion by market cap, BILL Holdings, Inc. (BILL) provides financial automation software for small and midsize businesses worldwide. The company provides software-as-a-service, cloud-based payments, and spend management products, which allow users to automate accounts payable and accounts receivable transactions, as well as enable users to connect with their suppliers and/or customers to do business
BILL’s stock has plunged 4% over the past month to close the last trading session at $51.47. However, the stock has surged 1.9% intraday.
BILL’s forward Price/Book of 1.39x is 67.4% lower than the industry average of 4.25x. However, its forward EV/Sales of 3.78x is 30.2% higher than the industry average of 2.90x.
BILL’s total revenue for the fiscal first quarter ended March 31, 2024, increased 1.7% year-over-year to $281.29 million. Its gross profit rose marginally year-over-year to $268.02 million. Additionally, the company’s net income came in at $31.81 million and $0.30 per share, compared to a loss of $31.14 million and $0.29 per share in the previous-year quarter.
Analysts expect BILL’s EPS for the quarter ended June 30, 2024, to decrease 20.6% year-over-year to $0.47, while its revenue for the same quarter is expected to increase 10.8% year-over-year to $328.02 million. It surpassed Street revenue and EPS estimates in each of the trailing quarters.
BILL’s mixed fundamentals are reflected in its POWR Ratings. The stock has an overall C rating, translating to Neutral in our proprietary rating system.
BILL has a C grade for Sentiment, Quality, and Momentum. It is ranked #48 among 129 stocks in the Software - Application industry.
Click here for the additional POWR Ratings for BILL (Growth, Value, and Stability).
Marqeta vs. BILL Holdings: Which Payment Solution Stock is More Promising?
The payment solution market is expanding as a result of the continuous digital transformation occurring across various industries, which has raised the demand for digital payment solutions.
Leading payment solution companies MQ and BILL stand to capitalize on bright industry growth prospects. However, BILL’s relatively better financials, valuation, and near-term outlook favor it as the payment solution stock to watch for now.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Software - Business industry here and the Software - Application industry here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
BILL shares were trading at $51.12 per share on Thursday afternoon, down $0.35 (-0.68%). Year-to-date, BILL has declined -37.35%, versus a 17.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
Marqeta vs. BILL Holdings: Which Payment Solution Stock Is More Promising? StockNews.com
