What Happened?
Shares of financial technology company PROG Holdings (NYSE:PRG) jumped 11.9% in the afternoon session after the company reported fourth-quarter results that beat profit estimates and issued a strong financial outlook for 2026. Although revenue for the quarter fell short of Wall Street's expectations and declined 7.8% compared to the previous year, investors appeared to focus on the company's profitability and positive forecast. PROG Holdings reported a non-GAAP profit of $0.74 per share, which was 24.37% higher than what analysts had anticipated. The main driver for the stock's jump was the company's guidance for the upcoming year. Its full-year revenue forecast was 8% above analysts' estimates at the midpoint, and its adjusted earnings guidance beat consensus estimates by 17.5%. This strong outlook suggested confidence from management about the company's future performance, overshadowing the mixed results of the reported quarter.
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What Is The Market Telling Us
PROG’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. But moves this big are rare even for PROG and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 6.5% on the news that investors grew more optimistic about a potential Federal Reserve interest rate cut in December. The positive sentiment was fueled by comments from New York Fed President John Williams, a voting member of the rate-setting Federal Open Market Committee, who stated the central bank could cut rates "in the near term" without jeopardizing its inflation targets. Following his remarks, market expectations for a rate cut in December shifted significantly. According to the CME FedWatch Tool, the probability of a December rate reduction surged from a 37% chance earlier in the day to 70%. While lower rates can compress bank profit margins, investors often view them as a catalyst for broader economic activity, potentially boosting loan demand and reducing the risk of defaults.
PROG is up 37.9% since the beginning of the year, and at $40.49 per share, has set a new 52-week high. Investors who bought $1,000 worth of PROG’s shares 5 years ago would now be looking at an investment worth $834.88.
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