Affirm to Post Q4 Earnings: Buy, Hold or Sell the Stock Now?

Leading buy now, pay later (BNPL) solution provider Affirm Holdings, Inc. AFRM is set to report its fourth-quarter fiscal 2025 results on Aug. 28, 2025, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s bottom line is currently pegged at an earnings of 11 cents per shareon revenues of $839.9 million.

The fiscal fourth-quarter earnings estimate has improved by 2 cents over the past 60 days. The bottom-line projection indicates a 178.6% year-over-year improvement. Also, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 27.4%.

For the current fiscal year, the Zacks Consensus Estimate for Affirm’s revenues is pegged at $3.19 billion, implying a rise of 37.2% year over year. The consensus mark for the current fiscal year’s EPS is pegged at an earnings of 5 cents, implying an improvement of 103% on a year-over-year basis.

Affirmbeat the consensus estimate for earnings in each of the last four quarters, with the average surprise being 102.2%.

Affirm Holdings, Inc. Price and EPS Surprise

Affirm Holdings, Inc. price-eps-surprise | Affirm Holdings, Inc. Quote

Affirm’s Q4 Earnings Whispers

Our proven model predicts a likely earnings beat for the company this time around as well. 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. That is precisely the case here.

AFRMhas an Earnings ESP of +62.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Now, let’s see how things have shaped up before the fiscal fourth-quarter earnings announcement.

Q4 Factors to Note for Affirm

Merchant network revenues are likely to have benefited from an expanding Gross Merchandise Volume (GMV). Also, the active merchants figure is expected to have witnessed a significant boost in the fiscal fourth quarter due to the company’s ability to strike deals with different businesses. The Zacks Consensus Estimate for merchant network revenues is pegged at $235 million, indicating a 29.8% rise from the prior-year quarter’s figure. 

The consensus mark for GMV for the fiscal fourth quarter implies 32.3% growth from the prior-year quarter’s number. Management anticipates the metric to be in the range of $9.4-$9.7 billion.

An increase in the number of transactions conducted through the Affirm platform is likely to have been supported by higher active merchants and consumers. The Zacks Consensus Estimate for active consumers indicates 20.9% year-over-year growth. Also, the consensus mark for transactions per active consumer suggests an 18.4% rise from the year-ago period.

An increase in the usage of Affirm’s virtual cards is expected to have driven card network revenues. The consensus mark for card network revenues indicates a 37.5% improvement from the year-ago quarter’s number. Meanwhile, the Zacks Consensus Estimate for interest income is pegged at $416.1 million, which implies a 23.3% year-over-year rise.

A growing off-balance sheet platform portfoliois likely to have contributed to the rise in servicing income. The consensus mark for servicing income is pegged at nearly $33.8 million, which indicates a 22.4% jump from the year-ago quarter. However, the quarterly results are likely to have witnessed higher transaction costs. The company expects transaction costs to be in the range of $430-$445 million.

Affirm’s Price Performance Comparison

Affirm stock has exhibited an upward movement, gaining a notable percentage over the year-to-date period. It has jumped 30.5% compared with the industry’s growth of 19.3%. In comparison, PayPal Holdings, Inc. PYPL, which also has a major footprint in the BNPL space, declined 18.1% during this time. Visa Inc. V, which is a rather traditional credit and debit card solutionsprovider and a major payments company, gained 10.8% year to date. Meanwhile, AFRM stocks have outperformed the S&P 500 significantly, which has increased 9.8%.

Price Performance – AFRM, PYPL, V, Industry & S&P 500

Affirm’s Valuation

Now, let’s look at the value Affirm offers investors at current levels.

Along with the recent share price appreciation, Affirm’s valuation appears stretched relative to its peers. Currently, the stock is trading at 6.33X forward 12-month sales, above both its three-year median of 3.63X and the industry average of 5.72X. This premium suggests limited near-term upside potential. AFRM currently carries a Value Score of F.

Meanwhile, PayPal and Visa stocks are currently trading at 1.94X and 14.67X forward P/S.

How to Play Affirm Stock Now?

Affirm is strengthening its position in the BNPL market by focusing on repeat usage and expanding its ecosystem. Short-term products like Pay in 2 and Pay in 30 drive higher re-engagement. Transaction volumes continue to grow, supported by expansion into essential spending categories such as groceries, fuel, travel and subscriptions. Key partnerships with Costco, World Market and Google Pay, along with a merchant network of nearly 360,000, provide a strong growth runway. The Shopify collaboration is set to extend Affirm’s presence into Europe, while a gaming tie-up with Xsolla opens doors to younger digital-native consumers.

However, competition remains intense, with PayPal, Block, Klarna and traditional institutions like Visa and Mastercard ramping up BNPL offerings. Walmart’s switch to Klarna highlights the risk of losing major retail partners. Rising operating expenses weighing on profitability also remain a concern. Moreover, the stock is currently trading above Wall Street’s average price target of $72.95, implying a 2.1% downside from current levels.

While Affirm offers solid growth potential, heightened competition, rising costs and a premium valuation suggest that investors may be better served waiting for a more attractive entry point, with upcoming earnings likely to provide clearer signals.

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

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