Financial services company Pathward Financial (NASDAQ:CASH) reported Q2 CY2025 results topping the market’s revenue expectations , with sales up 10.7% year on year to $195.8 million. Its GAAP profit of $1.81 per share was 8.4% above analysts’ consensus estimates.
Is now the time to buy Pathward Financial? Find out in our full research report.
Net Interest Income: $122.3 million vs analyst estimates of $112.9 million (10.3% year-on-year growth, 8.4% beat)
Net Interest Margin: 7.4% vs analyst estimates of 6.6% (86 basis point year-on-year increase, 83.5 bps beat)
Revenue: $195.8 million vs analyst estimates of $185 million (10.7% year-on-year growth, 5.8% beat)
EPS (GAAP): $1.81 vs analyst estimates of $1.67 (8.4% beat)
Market Capitalization: $1.89 billion
CEO Brett Pharr said, “We are encouraged by the results achieved in the third quarter, as they represent another quarter where we have successfully executed on our strategy and generated shareholder value. We have made progress on many fronts, and I am incredibly proud of what our team has been able to accomplish over the past nine months. Being the trusted platform that enables our partners to thrive remains our main focus, and we are working to deliver solutions for our clients.”
Formerly known as Meta Financial until its 2022 rebranding, Pathward Financial (NASDAQ:CASH) provides banking-as-a-service solutions and commercial finance products, enabling partners to offer financial services like prepaid cards, payment processing, and lending options.
From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions.
Luckily, Pathward Financial’s revenue grew at an impressive 10.8% compounded annual growth rate over the last five years. Its growth surpassed the average bank company and shows its offerings resonate with customers, a great starting point for our analysis.
Pathward Financial Quarterly Revenue
Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Pathward Financial’s annualized revenue growth of 9.8% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.
Pathward Financial Year-On-Year Revenue Growth
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
Story Continues
This quarter, Pathward Financial reported year-on-year revenue growth of 10.7%, and its $195.8 million of revenue exceeded Wall Street’s estimates by 5.8%.
Net interest income made up 57.9% of the company’s total revenue during the last five years, meaning Pathward Financial’s growth drivers strike a balance between lending and non-lending activities.
Pathward Financial Quarterly Net Interest Income as % of Revenue
Our experience and research show the market cares primarily about a bank’s net interest income growth as non-interest income is considered a lower-quality and non-recurring revenue source.
Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend.
The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.
When analyzing banks, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value by removing intangible assets of debatable liquidation worth. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.
Pathward Financial’s TBVPS grew at an incredible 10.1% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 29.9% annually over the last two years from $13.08 to $22.07 per share.
Pathward Financial Quarterly Tangible Book Value per Share
Over the next 12 months, Consensus estimates call for Pathward Financial’s TBVPS to grow by 27.9% to $28.23, elite growth rate.
We were impressed by how significantly Pathward Financial blew past analysts’ net interest income expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its tangible book value per share missed. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 1.9% to $81.87 immediately following the results.
Pathward Financial had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
