Buy, Sell or Hold SEZL Stock? Key Tips Ahead of Q2 Earnings

Sezzle Inc. SEZL will report second-quarter 2025 results on Aug. 7, after market close.

The Zacks Consensus Estimate for revenues in the to-be-reported quarter is pegged at $94.9 million, indicating a 69.6% year-over-year surge. The consensus estimate for total earnings is pinned at 58 cents per share, suggesting a 61.1% rise from the year-ago quarter’s actual. There has been no change in analyst estimates or revisions lately.

SEZL’s earnings surprise history is impressive. In the four trailing quarters, it surpassed the Zacks Consensus Estimate, with an average surprise of 159.9%.

SEZL Showcases Lower Chances of Posting Q2 Earnings Beat

Our proven model does not conclusively predict an earnings beat for Sezzle this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

SEZL has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Product Innovation to Have Been SEZL’s Driver in Q2

In the first quarter of 2025, Sezzle saw an increase in user engagement, with customer purchase frequency rising to 6.1 times from 4.5 times in the same period last year. We expect this trend to continue as the company introduces product features.

SEZL’s product innovation and diversification strategy aims to enhance the customer experience. For example, the introduction of Sezzle On-Demand gives users the flexibility to Pay-in-4 wherever Visa is accepted. This strategy helps customers move beyond the limitations of its direct merchant partnerships.

Sezzle Stock Outperforms Industry & Peers

SEZL shares have skyrocketed 1103% in a year, outperforming the 22.9% rally of its industry and the 19.6% rise of the Zacks S&P 500 composite. The company has performed better than its industry peers, Corpay CPAY and Fiserv FI. Corpay has gained 19.7%, while Fiserv has declined 13.5% for the same period.

1-Year Price Performance

The SEZL stock appears more expensive than the industry. Sezzle is currently trading at a trailing 12-month price-to-earnings ratio of 40.79X, higher than the industry's 21.14X. SEZL is more expensive than Corpay’s 14.04X and Fiserv’s 12.13X.

P/E - F12M

Sezzle’s Investment Considerations

SEZL has tactfully carved out a niche within the fintech space by addressing the pain points of the underbanked population. It has provided immense financial flexibility to the underbanked demographic during checkout. With digital payment picking up pace in the United States, we are bullish about Sezzle’s long-term growth prospects.

Financially, SEZL has been a standout performer, with the top line skyrocketing 123.3% year over year in the first quarter of 2025. This explosive growth can be attributed to rising transaction volume, evidenced by a 64.1% year-over-year surge in the gross merchandise volume. With operating income soaring 260.6% year over year, we are witnessing operating leverage and scalability.

In terms of profitability and liquidity, Sezzle's stance exceeds the industry figures. By the end of the first quarter of 2025, SEZL registered a remarkable return on equity of 114.4%, exceeding the industry’s 48.6%. The same has been observed in the return on invested capital forefront, where SEZL’s 63.5% surpassed the industry’s 22.2%. With the current ratio hovering at 2.62, outpacing the industry’s 1.15, we are confident about Sezzle’s high liquidity position.

However, SEZL is addressing strict rules and regulations as the Consumer Financial Protection Bureau is actively examining companies due to concerns over consumer debt, dispute resolution and transparency.

Some states in the United States, including New York, are implementing their buy now, pay later rules and regulations, which may increase compliance costs, lead to stricter affordability checks and raise operating expenses. Increasing rules and regulations can raise red flags for investors.

Final Verdict

Sezzle is a strong player in the credit-tech domain. With its strategy to cater to the underbanked, the company has found itself a ground to prosper in the long run. Financially, the company has performed well over the past quarter, and we expect it to display the same as its product innovation strategy keeps up the pace.

However, strict rules and regulations can hinder SEZL’s operations by increasing costs. Investors may be highly impressed by the stock’s price rise over the past year. However, a high valuation is severely alarming. Lower chances of earnings beat add to the concern.

Hence, we recommend investors who already have Sezzle in their portfolio not buy it anymore. Potential buyers are urged to stay away from this stock for now and make a move after the earnings release.

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This article originally published on Zacks Investment Research (zacks.com).

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