ACI Worldwide

ACI Worldwide (ACIW - Snapshot Report) is reaping the benefits of a growing backlog. The company raised its outlook and there is a flurry of M&A activity in the industry.

Company Description

ACI Worldwide offers electronic payment software for financial institutions, retailers and other processors on a global scale.

Revenue Jumped 23%

The last quarterly report was back in July, but the results were great. Revenue was up $21 million, or 23%, driven by a strong backlog. And that backlog is getting bigger as bookings grew 36% to $147 million, paving the way for the company to raise its outlook.

Earnings for the quarter came in at $0.29 per share, 21 cents higher than the Zacks Consensus Estimate and giving ACI Worldwide its third consecutive surprise.

Estimates Spike

Given the results and the optimistic guidance from the company, analysts pushed forecasts higher. This year's average estimate rose 14 cents, to $1.27.

Next year's consensus is up 11 cents to $1.55. Last year ACI Worldwide brought in $0.80 per share, so the projected growth rates are now 59% and 21%, respectively.

M&A Activity

In short ACIW put a bid in to buy S1 Corp (SONE) to break up a potential merger between SONE and Fundtech (FNDT). But a private company swooped in and bought FNDT, which subsequently led the deal to merge with SONE being broken off.

This doesn't mean that a deal involving ACIW is a given, but the industry is seeing a flurry of activity. Keep an eye out for new developments.

The Chart

Below you can see how consistent earnings have been growing for ACIW. While the valuations are not exactly cheap, as long as estimates keep moving higher, the share price should as well.

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

Read the full analyst report on ACIW