Nayax Ltd. (NYAX): A Bull Case Theory

We came across a bullish thesis on Nayax Ltd. (NYAX) on Shareholdersunite Essentials’ Substack by Shareholdersunite. In this article, we will summarize the bulls’ thesis on NYAX. Nayax Ltd.’s share was trading at $26.04 as of Oct 14^th. NYAX’s forward P/E was 133.33 according to Yahoo Finance.

Nayax (NYAX) is an Israeli company providing comprehensive payment solutions for retailers, particularly in the self-service and cashless payment markets. Its operations span hardware and software, delivering a seamless “plug and play” experience for various retail and self-service sectors.

Nayax generates revenue from multiple software platforms sold on a SaaS basis, offering payments, management, and loyalty suites. The company also manufactures proprietary POS hardware for digital payments and EV charging stations. Its solutions enable merchants to accept cashless payments, optimize operations, and engage consumers, driving substantial recurring revenue growth.

Investors are attracted to Nayax due to its position in the rapidly expanding cashless payments sector. Its recurring revenue grew 47% in Q2 2024, with a 130% net retention rate, showcasing strong customer loyalty and expansion potential. With 39% overall revenue growth, gross margin improvements (now 66%), and rising operating leverage, the company’s financials highlight robust progress. Nayax’s strategic shift to a hardware-as-a-service model further underscores its long-term vision, despite an initial drag on revenue.

Valued at an EV of $969M, Nayax trades at 2.93x FY24 EV/Sales and 30x EV/EBITDA. Although shares seem expensive on an earnings basis, expected earnings growth, driven by 38%+ forecasted revenue growth in FY24, strengthens the investment case. Nayax’s expansion into EV charging, Latin America, and other new verticals, supported by strategic acquisitions, ensures continued market leadership. Its ability to scale efficiently while increasing gross margins makes Nayax a compelling opportunity for investors looking for high-growth exposure in the cashless payments and self-service markets.

Nayax Ltd. is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 3 hedge fund portfolios held NYAX at the end of the second quarter which was 3 in the previous quarter. While we acknowledge the risk and potential of NYAX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NYAX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and 10 Best of Breed Stocks to Buy For The Third Quarter of 2024 According to Bank of America.

Disclosure: None. This article was originally published at Insider Monkey.