Should You Buy, Hold or Sell Pagaya Stock Ahead of Q2 Earnings?

The Zacks Consensus Estimate for PGY’s second-quarter revenues is pegged at $358.2 million, which implies a 9.7% year-over-year improvement.

In the past 30 days, the consensus estimate for the company’s earnings for the to-be-reported quarter has been unchanged at 71 cents. The estimate indicates 10.9% growth from the prior-year quarter.

Estimate Revision Trend

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Pagaya has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 29%.

Earnings Surprise History

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Key Q2 Estimates for Pagaya

PGY’s growth strategy focuses on expanding products to boost partner customer value, enhancing monetization of existing partnerships and adding new enterprise lending partners, especially large U.S. banks and auto captives. Supported by this, total revenues and other income are anticipated to have increased in the quarter.

Management expects second-quarter total revenues and other income between $345 million and $365 million.

Supported by improved economics in the company’s personal loan and auto verticals, revenues from fees are expected to have improved in the second quarter. The Zacks Consensus Estimate for the metric is $339 million, indicating a 6.6% year-over-year rise.

The Zacks Consensus Estimate for network volume of $2.98 billion implies growth of 14.5% from the prior-year quarter’s reported number. Also, the company expects network volume of $2.875-$3.075 billion.

Management expects adjusted EBITDA between $100 million and $115 million. The company expects GAAP net income between $25 million and $45 million.

What Our Model Unveils for Pagaya

According to our proven model, it cannot be conclusively predicted whether Pagaya will be able to beat earnings estimates this time. This is because it does not have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), which is required to be confident of an earnings beat.

Pagaya has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

PGY carries a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

PGY’s Price Performance & Valuation

Pagaya shares have gained 56% in the second quarter compared with the industry’s rise of 4.2% and the S&P 500 Index’s 14.5% growth. The stock outperformed its peers, Upstart Holdings UPST and Virtu Financial VIRT.

2Q26 PGY Price Performance

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Virtu Financial will report quarterly results tomorrow, before market open, while Upstart is scheduled to announce quarterly results on Aug. 4, after market close.

In terms of valuation, PGY shares are trading at a discount relative to the industry. The stock is presently trading at a trailing 12-month price/book (P/B) of 2.30X. This is below the industry’s 3.11X.

Price-to-Book TTM

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The PGY stock is trading at a discount compared with both Upstart and Virtu Financial. At present, Upstart has a P/B of 3.63X, while Virtu Financial’s P/B is 4.14X.

How to Approach Pagaya Stock Before Q2 Earnings?

Given PGY’s resilient business model and capital-efficient funding strategy, it stands out in the fintech space. Its AI-driven platform, diversified revenue streams and reliance on forward flow agreements shield it from market volatility and credit risks.

With accelerating earnings estimates, PGY is well-positioned for continued growth. Moreover, the stock trades at a discount relative to the industry at large, making its valuation attractive.

However, the company has been witnessing a persistent increase in expenses over the past few years. Over the last three years (2022-2025), total costs and operating expenses saw a compound annual growth rate of 1.2%, mainly because of elevated production costs. Since production costs are highly correlated to the company’s network volume, the metric is anticipated to keep increasing in the near term as the value of the company’s assets originated by its partners with the assistance of AI and with respect to single-family rental operations grow.

Thus, investors should not rush to buy the stock now. They should keep an eye on macroeconomic factors and policy matters that are likely to influence the company’s future performance.

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

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