Cardtronics (CATM - Snapshot Report) may have missed on its last EPS number, but analyst and investors are still buying in. Estimates are showing double-digit growth and shares are currently a Zacks #1 Rank (Strong Buy).
Cardtronics is the biggest non-bank owner of ATMs. The company has over 33,000 machines in the North America and the U.K. Popular locations include 7-Eleven, Chevron, Costco and others. Additionally, they offer services to small banks and other card issuers at over 12,000 locations.
Miss, but a Good Quarter
Even though the company fell short of bottom-line expectations, analysts and investors still liked the results enough to keep buying shares. Revenue for the first quarter were up 8%, to $138 according to the Apr 28 press release.
Margins also improved as well as transaction counts. Earnings per share came in 2 cents below expectations though, at $0.22. That miss snapped a 4-quarter streak of beating expectations. But they could get back on track when they report again, which should be a month or so.
Right now the full-year Zacks Consensus Estimate for 2011 is at $1.12, which is 14% higher than 2010. Next year's estimates are averaging $1.34, good enough for a 20% growth rate.
Shares are trading around 21 times forward estimates, which puts the PEG ratio near 1.5 times. Not really a value story there, but not so high that shares should be written off. The P/S is at 1.9.
What might get investors to look past the valuation is the astronomical 150% ROE and a 10% ROA. Both metrics lead the peer group.
Shares of CATM have been red hot for some time now. Some may wait until shares look less "over bought" but that momentum could resume any moment for this Zacks #1 Rank (Strong Buy).
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service