It has been about a month since the last earnings report for Total System Services . Shares have added about 1.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Total System 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's Q2 Earnings Beat Estimates, View Up
Total System Services, Inc.’s second-quarter 2018 earnings per share of $1.11 surpassed the Zacks Consensus Estimate by 2.7% and surged 30.5% year over year. Exceptional performances by all three segments have contributed to this favorable result.
Net revenues were $956.5 million, up 13.3% year over year. The top line also beat the Zacks Consensus Estimate by 2.5%.
The company reported adjusted EBITDA of $345 million, up 12.1% from the year-ago quarter.
Issuer Solutions
In the second quarter, net revenues for this segment increased 7.2% year over year to $421 million driven by 13.3% increase in total transaction year over year.
Operating income of $151 million was up 2.9% year over year. Operating margin of 36% contracted 150 basis points (bps) from the year-ago period.
Merchant Solutions
Net revenues rose 24.3% to $346.4 million. It was mainly backed by Cayan's strong performance and the benefit of the low double-digit organic net revenue growth of pre-Cayan business. Dollar sales volume for the segment grew 29.7% year over year to $40.3 billion.
Operating income increased 22.4% to $124.8 million while operating margin declined 60 basis points to 36% from the prior-year quarter.
Consumer Solutions
Net revenues for this segment amounted to $200 million, up 9.4%, driven by 9.6% growth in GDV and solid contribution across all four distribution channels.
Operating income rose 9.1% to $50.2 million while operating margin contracted 10 basis points to 25.1%.
Financial Position
Total assets jumped 18% from Mar 31, 2018 to $7.5 billion as of Jun 30, 2018.
Total shareholders’ equity climbed to $2.5 billion on Jun 30, 2018 from $2.2 billion at the end of March 2018.
Free cash flow for the first six months of 2018 totaled $382.8 million, up 14.1% from the first half of 2017.
2018 Guidance
Driven by strong second-quarter results and favorable expectations for the remaining year, the company has raised its 2018 view. The company expects total revenues on a GAAP basis in the range of $3.9-$4 billion, down 20-18%. On a non-GAAP basis, net revenues are anticipated in the range of $3.7-$3.8 billion, reflecting year-over-year growth of 10-13%.
GAAP EPS will likely be in the $3.02-$3.12 band, down 4-1% from the prior-year quarter. Adjusted EPS is expected between $4.3 and $4.4, reflecting an increase of about 28-31%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, Total System has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. Charting a somewhat similar path, 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
Total System has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Total System (TSS) Up 1.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Total System Services . Shares have added about 1.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Total System 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's Q2 Earnings Beat Estimates, View Up
Total System Services, Inc.’s second-quarter 2018 earnings per share of $1.11 surpassed the Zacks Consensus Estimate by 2.7% and surged 30.5% year over year. Exceptional performances by all three segments have contributed to this favorable result.
Net revenues were $956.5 million, up 13.3% year over year. The top line also beat the Zacks Consensus Estimate by 2.5%.
The company reported adjusted EBITDA of $345 million, up 12.1% from the year-ago quarter.
Issuer Solutions
In the second quarter, net revenues for this segment increased 7.2% year over year to $421 million driven by 13.3% increase in total transaction year over year.
Operating income of $151 million was up 2.9% year over year. Operating margin of 36% contracted 150 basis points (bps) from the year-ago period.
Merchant Solutions
Net revenues rose 24.3% to $346.4 million. It was mainly backed by Cayan's strong performance and the benefit of the low double-digit organic net revenue growth of pre-Cayan business. Dollar sales volume for the segment grew 29.7% year over year to $40.3 billion.
Operating income increased 22.4% to $124.8 million while operating margin declined 60 basis points to 36% from the prior-year quarter.
Consumer Solutions
Net revenues for this segment amounted to $200 million, up 9.4%, driven by 9.6% growth in GDV and solid contribution across all four distribution channels.
Operating income rose 9.1% to $50.2 million while operating margin contracted 10 basis points to 25.1%.
Financial Position
Total assets jumped 18% from Mar 31, 2018 to $7.5 billion as of Jun 30, 2018.
Total shareholders’ equity climbed to $2.5 billion on Jun 30, 2018 from $2.2 billion at the end of March 2018.
Free cash flow for the first six months of 2018 totaled $382.8 million, up 14.1% from the first half of 2017.
2018 Guidance
Driven by strong second-quarter results and favorable expectations for the remaining year, the company has raised its 2018 view. The company expects total revenues on a GAAP basis in the range of $3.9-$4 billion, down 20-18%. On a non-GAAP basis, net revenues are anticipated in the range of $3.7-$3.8 billion, reflecting year-over-year growth of 10-13%.
GAAP EPS will likely be in the $3.02-$3.12 band, down 4-1% from the prior-year quarter. Adjusted EPS is expected between $4.3 and $4.4, reflecting an increase of about 28-31%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, Total System has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. Charting a somewhat similar path, 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
Total System has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.