A month has gone by since the last earnings report for Total System Services, Inc. . Shares have added about 5.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Total System View Up on Q2 Earnings Beat, Hikes Divided
Total System Services, Inc’s second-quarter 2017 earnings per share of 85 cents per share surpassed the Zacks Consensus Estimate by 6.3% and grew 16.4% year over year.
Revenues of $1.2 million also beat the Zacks Consensus Estimate of $1.2 million, up 6.1% year over year.
Total expenses of $1.02 million increased 1.3% year over year.
Segments Results
Issuer Solutions
Net revenue for this segment increased 3.9% year over year to $392.76 million. Total transaction for this segment was $5.34 million in the reported quarter, up 7.1% year over year.
Operating income of $147.2 million for the segment was up 14.6% year over year. Operating margin of 37.5% increased from 34% in the year-ago quarter.
Merchant Services
Net revenue increased significantly year over year to $278.5 million from $261.4 million in the year-ago quarter. Dollar sales volume for this segment grew significantly year over year to $31.12 million from $28.56 million in the year-ago quarter.
Operating income advanced 13.4% year over year to $101.9 million. Operating margin surged to 36.6% from 34.4% in the year-ago quarter.
Net Spend
Net revenue increased 12.6% year over year to $183 million in the reported quarter. Gross dollar volume for this segment was $7.60 million, up 15% year over year. The company renewed its agreement with Dollar General for four more years.
Operating income grew 8.4% year over year to $46 million. Operating margin decreased to 25.2% from 26.1% in the prior-year quarter.
The company’s revised expectation for 2017 for net revenue growth in the band of 9–12%.
Financial Update
Total assets decreased slightly to $6.27 million as of Jun 30, 2017 from $6.37 billion at year-end 2016. Total shareholder’s equity climbed to $2.26 billion on Jun 30, 2017 from $2.09 billion at the end of 2016.
Long-term debt was $2.6 billion as of quarter end, down from $3.3 billion at 2016-year end.
Free cash flow totaled $335.2 million in the first half of 2017 compared with $257.3 million in the year-ago period.
Dividend Update
The board of directors approved 30% hike to quarterly dividend. The new dividend of 13 cents per share will be paid on Oct 2, 2017 to shareholders of record on Sep 21, 2017.
2017 Guidance Up
It now expects total revenue on a GAAP basis in the range of $4.80–$4.88 million (previous expectation $4.77–$4.87 billion) reflecting an increase of 15–17%.
On a non-GAAP basis, net revenue is anticipated in the range of $3.31–$3.39 million (previous expectation $3.295–$3.395 billion) reflecting a rise of 9–12%.
GAAP EPS is projected in the range of $2.30–$2.38 (previous expectation $2.25–$2.32) representing a rise of 33–37%. Adjusted EPS attributable to the company’s common shareholders is estimated in the range of $3.22–$3.30 (previous expectation $3.16-$3.26) reflecting an increase of about 15–18%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Total System's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.
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Total System (TSS) Up 5.7% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Total System Services, Inc. . Shares have added about 5.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Total System View Up on Q2 Earnings Beat, Hikes Divided
Total System Services, Inc’s second-quarter 2017 earnings per share of 85 cents per share surpassed the Zacks Consensus Estimate by 6.3% and grew 16.4% year over year.
Revenues of $1.2 million also beat the Zacks Consensus Estimate of $1.2 million, up 6.1% year over year.
Total expenses of $1.02 million increased 1.3% year over year.
Segments Results
Issuer Solutions
Net revenue for this segment increased 3.9% year over year to $392.76 million. Total transaction for this segment was $5.34 million in the reported quarter, up 7.1% year over year.
Operating income of $147.2 million for the segment was up 14.6% year over year. Operating margin of 37.5% increased from 34% in the year-ago quarter.
Merchant Services
Net revenue increased significantly year over year to $278.5 million from $261.4 million in the year-ago quarter. Dollar sales volume for this segment grew significantly year over year to $31.12 million from $28.56 million in the year-ago quarter.
Operating income advanced 13.4% year over year to $101.9 million. Operating margin surged to 36.6% from 34.4% in the year-ago quarter.
Net Spend
Net revenue increased 12.6% year over year to $183 million in the reported quarter. Gross dollar volume for this segment was $7.60 million, up 15% year over year. The company renewed its agreement with Dollar General for four more years.
Operating income grew 8.4% year over year to $46 million. Operating margin decreased to 25.2% from 26.1% in the prior-year quarter.
The company’s revised expectation for 2017 for net revenue growth in the band of 9–12%.
Financial Update
Total assets decreased slightly to $6.27 million as of Jun 30, 2017 from $6.37 billion at year-end 2016. Total shareholder’s equity climbed to $2.26 billion on Jun 30, 2017 from $2.09 billion at the end of 2016.
Long-term debt was $2.6 billion as of quarter end, down from $3.3 billion at 2016-year end.
Free cash flow totaled $335.2 million in the first half of 2017 compared with $257.3 million in the year-ago period.
Dividend Update
The board of directors approved 30% hike to quarterly dividend. The new dividend of 13 cents per share will be paid on Oct 2, 2017 to shareholders of record on Sep 21, 2017.
2017 Guidance Up
It now expects total revenue on a GAAP basis in the range of $4.80–$4.88 million (previous expectation $4.77–$4.87 billion) reflecting an increase of 15–17%.
On a non-GAAP basis, net revenue is anticipated in the range of $3.31–$3.39 million (previous expectation $3.295–$3.395 billion) reflecting a rise of 9–12%.
GAAP EPS is projected in the range of $2.30–$2.38 (previous expectation $2.25–$2.32) representing a rise of 33–37%. Adjusted EPS attributable to the company’s common shareholders is estimated in the range of $3.22–$3.30 (previous expectation $3.16-$3.26) reflecting an increase of about 15–18%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Total System Services, Inc. Price and Consensus
Total System Services, Inc. Price and Consensus | Total System Services, Inc. Quote
VGM Scores
At this time, Total System's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.