) has topped the
Zacks Consensus Estimate in five straight quarters and shows
excellent earnings growth making it a Zacks #1 Rank (Strong Buy).
Heartland Payment provides bankcard payment processing services in
the United States and Canada. It facilitates the exchange of
information and funds between merchants and cardholder's financial
institutions and offers end-to-end electronic payment processing
services, including merchant set-up and training, transaction
authorization and electronic draft capture, clearing and
settlement, merchant accounting, merchant assistance and support,
and risk management to merchants. The company markets its bankcard
payment processing services directly to small and mid-sized
merchants, and national and mid-tier merchants. Heartland Payment
was incorporated in 2000 and is headquartered in Princeton, New
Heartland Payment Beats Estimates in Five Straight Quarters
Heartland Payment topped the Zacks Consensus
Estimate in each of the last five quarters. During the string of
positive earnings surprises, the company topped estimates by an
average of $0.05 per share which translated into a 24.5% surprise.
Wall Street has taken notice, and as a result of the strong string
of earnings the stock has moved higher by an average of more than
10% following the earnings reports.
The largest impact on shares came following the March 2011 quarter . Heartland Payment reported earnings of $0.20 per
share, $0.06 ahead of the Zacks Consensus Estimate. That quarter
saw revenues of $468 million, about $19 million ahead of
expectations. The beats on the top and bottom line helped lift
the stock higher by 15% in the session following the report.
Heartland Payment Most Recent Report
On May 1, the company reported earnings of $0.34, $0.10 better
than the Zacks Consensus Estimate of $0.24. The 41% positive
earnings surprise was also backed up by a beat on the top line as
well. The stock moved higher by 7.25% in the trading session
following the fifth straight positive earnings surprise.
Heartland Payment Sees Estimates Moving Higher
Estimates for Heartland Payment have been rising of late. The
Consensus Estimate for 2012 for Heartland Payment Automotive stood
January 2012. The consensus has since moved higher to $1.46. Over
the same time period estimates for 2013 have moved from $1.53 to
$1.74. The implied earnings growth rate of more than 19% is
just what aggressive growth investors are seeking.
Heartland Payment trades at a premium to the industry average on
nearly all metrics that aggressive growth investors follow. The
trailing twelve months PE of 22x is well above the 15x industry
average. The forward PE carries a similar premium, with a 19x
multiple compared to a 12x industry average multiple. The price
to book of 4.7x is much higher than the 2.6x industry average.
The only metric that has Heartland Payment trading at a discount
to the industry average is a price to sales. Trading at only 0.5x
trailing twelve months sales, HPY's multiple is more than 4 times
lower than the industry average of 2.35x.
A quick look at price and consensus chart shows aggressive
investors something that gets their hearts pumping. A steady
stream of positive earnings revisions has turned this chart into
the dream idea of improving prospect for a stock. The earnings
growth is clearly visible between 2011 and 2012, and the gap
continues to be strong with the increasing gap between 2012 and
2013. One of the strongest indications of potential out
performance is the continued increases for 2012 and 2013,
suggesting that the growth the company is seeing is not limited to
one year. Stock has yet to catch up to the strong earnings growth
which implies that it is undervalued. Heartland Payment is a
Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor
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