Why CPI Card Group Stock Keeps Going Up

Why CPI Card Group Stock Keeps Going Up

Rich Smith, The Motley Fool

Mon, August 10, 2026 at 6:43 PM GMT+3 3 min read

• PMTS +5.34%
• NVDA -1.90%

CPI Card Group (NASDAQ: PMTS) stock is on a roll.

Shares of the manufacturer of credit cards and debit cards -- the literal, physical pieces of numbered plastic that you carry around in your wallet -- have risen each of the past three trading days, including a giant 13.3% leap after earnings last week, and a smaller 5.5% hop through 10:30 a.m. ET this morning.

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And yet, investors initially didn't react well to CPI's earnings news.

Not well at all.

CPI Card Q2 earnings

Shares of CPI stock sold off after StreetInsider.com reported the company earned only $0.17 per share in Q2, "$0.36 worse than the analyst estimate of $0.53." And yet, if you read a little deeper, the news got better -- and once investors did that, the stock price rout turned into a rally.

What did CPI say to change investors' minds?

First off, the company grew its sales 15% year over year, to $149 million. CPI quadrupled its profit by marrying stronger profit margins to the greater revenue. Free cash flow also went parabolic, shooting up from just $0.5 million a year ago to $25.9 million this time around.

As a result, while CPI claims only $13.8 million for its "net earnings" over the past year, its actual free cash flow generated over the period is $76.5 million.

What this means for CPI Group stock

Valued on GAAP earnings, CPI stock seems reasonably priced at 24 times trailing earnings, but here's the thing: If you value the stock on free cash flow, its price-to-free cash flow ratio drops to just 4.2x -- astoundingly cheap. Even factoring net debt into the picture, the current enterprise value-to-FCF ratio is only 7.5x.

For a stock growing sales at 15%, that's cheap enough to buy.

Should you buy stock in Cpi Card Group right now?

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Rich Smith has positions in Cpi Card Group. The Motley Fool has positions in and recommends Cpi Card Group. The Motley Fool has a disclosure policy.

Why CPI Card Group Stock Keeps Going Up was originally published by The Motley Fool