SoFi (SOFI +1.82%) recently reported its first-quarter earnings, and the results looked rather strong throughout the business. The membership base is growing rapidly, the bank is doing a fantastic job of cross-selling products to its existing customers, and loan volume has never been higher.

The stock was under pressure after the earnings report, mainly because SoFi's guidance failed to impress investors, and to be fair, results from the company's technology platform weren't great. But one metric shows why investors should pay close attention to SoFi, especially given its current valuation.

Image source: SoFi.

A Rule of 40 company, and then some

One of the most popular benchmarks used to analyze technology and growth companies is known as the Rule of 40. In a nutshell, if a company's revenue growth rate and its EBITDA margin, as percentages, add up to more than 40, the company is doing a good job of producing healthy growth and profitability at the same time.

In the first quarter, SoFi reported 41% year-over-year revenue growth, which would be considered strong even for a company that was barely profitable. But the company also reported an adjusted EBITDA margin of 31%. Those numbers combine to give SoFi a Rule of 40 score of 72. To put it mildly, a score this high is rare to see in the financial services industry.

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NASDAQ: SOFI

SoFi Technologies

Today's Change

(1.82%) $0.33

Current Price

$18.20

Key Data Points

Market Cap

$23B

Day's Range

$17.50 - $18.29

52wk Range

$14.92 - $32.73

Volume

2.9K

Avg Vol

70.7M

Gross Margin

61.74%

In fact, this was SoFi's 18^th consecutive quarter of achieving the Rule of 40. That's impressive, especially considering SoFi has only had a banking charter since 2022. It's also impressive, given that the score came at a time when SoFi has significantly ramped up its marketing spending to increase brand awareness, despite a 27% decline in tech platform revenue (due to the loss of one major client).

The price is right

As mentioned, a Rule of 40 score of 72 is very rare in the financial sector. At the current stock price, SoFi trades for about 1.9 times book value. For comparison, mega-bank stock JPMorgan Chase (JPM +0.10%) trades at approximately 2.4 times book value. Don't get me wrong -- JPMorgan Chase is a phenomenal and well-run institution. But it certainly isn't growing its top line at a 40% pace.

Also, SoFi trades for about 26 times expected 2026 earnings. But management is guiding for 40% annualized earnings growth through at least 2028.

In a nutshell, SoFi is not only a rare combination of growth and profitability. Its growth and future potential don't seem to be reflected in its stock price at all.