Key Points

• CPI Card stock missed on earnings last week.

• Investors panicked at first -- then turned around and bought the stock when they saw all the free cash flow.

Shares of the manufacturer of credit cards and debit cards -- the literal, physical pieces of numbered plastic that you carry around in your wallet -- have risen each of the past three trading days, including a giant 13.3% leap after earnings last week, and a smaller 5.5% hop through 10:30 a.m. ET this morning.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

And yet, investors initially didn't react well to CPI's earnings news.

Not well at all.

CPI Card Q2 earnings

Shares of CPI stock sold off after StreetInsider.com reported the company earned only $0.17 per share in Q2, "$0.36 worse than the analyst estimate of $0.53." And yet, if you read a little deeper, the news got better -- and once investors did that, the stock price rout turned into a rally.

What did CPI say to change investors' minds?

First off, the company grew its sales 15% year over year, to $149 million. CPI quadrupled its profit by marrying stronger profit margins to the greater revenue. Free cash flow also went parabolic, shooting up from just $0.5 million a year ago to $25.9 million this time around.

As a result, while CPI claims only $13.8 million for its "net earnings" over the past year, its actual free cash flow generated over the period is $76.5 million.

What this means for CPI Group stock

Valued on GAAP earnings, CPI stock seems reasonably priced at 24 times trailing earnings, but here's the thing: If you value the stock on free cash flow, its price-to-free cash flow ratio drops to just 4.2x -- astoundingly cheap. Even factoring net debt into the picture, the current enterprise value-to-FCF ratio is only 7.5x.

For a stock growing sales at 15%, that's cheap enough to buy.

Should you buy stock in Cpi Card Group right now?

Before you buy stock in Cpi Card Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Cpi Card Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $399,832!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,374,595!*

Now, it’s worth noting Stock Advisor’s total average return is 968% — a market-crushing outperformance compared to 215% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.

*Stock Advisor returns as of August 10, 2026.

Rich Smith has positions in Cpi Card Group. The Motley Fool has positions in and recommends Cpi Card Group. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.