OneSpan Inc: Battered Mobile Security Provider has 100% Upside

OneSpan Inc: Battered Mobile Security Provider has 100% Upside

OneSpan Inc: Read Why Insiders are Buying this Battered Stock

The growth of financial technology (fintech) will continue to accelerate as more companies employ technologies to deal with data and other key critical functions.

An intriguing small-cap fintech play with a strong risk/reward opportunity is OneSpan Inc (NASDAQ:OSPN), which is trading near its 52-week low and down 33% over the past year. I view OSPN stock as an aggressive opportunity, given that its shares are a whopping 59% below their record high of $35.00 in June 2015.

OneSpan develops software used primarily by financial institutions to securitize access to their platforms. The company’s solutions include biometric authentication and facial recognition, two areas that are key to securitized access.

The company’s client list comprises over 10,000 customers in 23 countries, including more than 50% of the top 100 global banks and top financial institutions in Europe, the U.S., and Canada. Sectors using the OneSpan’s solutions include government, enterprise, insurance, auto finance, and personal loans.


Services offered by OneSpan Inc include digital onboarding, fraud mitigation, transaction management, and e-signatures.

On the chart, OSPN stock retested the $21.00 level but failed to hold. There is decent support at $12.00.

Chart courtesy of

An upside sustainable break of $20.00 could see OneSpan stock drive toward $30.00, a potential move of over 100%.

Revenue Growth and Profitability Support Bullish Case for OSPN Stock

Investors looking at OneSpan stock should understand that there will be mixed results and hurdles along the way, which is generally the case for smaller companies.

In the case of OneSpan Inc, revenues ramped higher in four of the last five years, with the exception of 2016.

Fiscal Year Revenue (Millions) Growth
2014 $201.5 30%
2015 $241.4 19.8%
2016 $192.3 -20.3%
2017 $193.3 0.5%
2018 $212.3 9.8%

(Source: “OneSpan Inc.,” MarketWatch, last accessed June 7, 2019.)

The company’s revenue growth rate is down from 2014 and 2015 but it’s showing signs of stabilizing after the decline in 2016.

OneSpan is estimated to grow its revenues by 9.6% to $232.6 million in 2019 and by 11.2% to $258.7 million in 2020. (Source: “OneSpan Inc. (OSPN),”Yahoo! Finance, last accessed June 7, 2019.)

Along the way, OneSpan Inc produced positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in the last five straight years, albeit 2016 to 2018 was marked by declines in EBITDA. Look for this to pick up as profits rise.

Fiscal Year Revenue (Millions) Growth
2014 $44.2 135.9%
2015 $56.8 28.3%
2016 $20.4 -64.1%
2017 $17.0 -16.5%
2018 $13.6 -20.3%

(Source: MarketWatch, op. cit.)

OneSpan has been profitable, but it has struggled to produce consistency since reporting profits of $1.06 per diluted share in 2015:

Fiscal Year Diluted Earnings Per Share 
2014 $0.83
2015 $1.06
2016 $0.26
2017 -$0.56
2018 $0.10

(Source: Ibid.)

OneSpan’s earnings outlook looks encouraging. The company is expected to make $0.41 per diluted share in 2019 and $0.66 per diluted share in 2020. (Source: “Yahoo! Finance, op. cit.)

OneSpan Inc delivered positive free cash flow (FCF) from 2014 to 2017, prior to a recording a negative reading in 2018. The higher expected earnings should help drive FCF back to positive.

Fiscal Year FCF (Millions)
2014 $37.3
2015 $67.6
2016 $26.4
2017 $14.5
2018 -$2.5

(Source: MarketWatch, op. cit.)

Analyst Take

OneSpan Inc is favored by institutions and insiders. About 197 institutions hold 67% of the outstanding shares. Moreover. Insiders bought 153,281 shares over the last six months while selling none of their shares. (Source: “Yahoo! Finance, op. cit.)

So while OSPN stock is facing some current price pressure, I advise taking the longer-term view, which looks bullish.