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Heartland Payment Upgraded to Strong Buy

by Zacks Equity Research

January 04, 2013 | Comments : 0 Recommended this article: (0)

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On January 3, Zacks Investment Research upgraded Heartland Payment Systems ( HPY - Snapshot Report ) to a Zacks #1 Rank (Strong Buy).

Why the Upgrade?

Heartland Payment has been witnessing rising earnings estimates on the back of solid momentum in its underlying business as reflected in its earnings beat and positive guidance at the time of the last quarterly release. The company's growing market share in the fragmented merchant processing space is helping it expand margins.

This payment processor has delivered positive earnings surprises in all 4 quarters with an average beat of 20.7%, a trend that is likely to persist in the coming quarters. The long-term expected earnings growth rate for this stock is 15%.

Heartland Payment reported its third-quarter results on November 1. Non-GAAP earnings per share came in at 48 cents, surpassing the Zacks Consensus Estimate by 14.3% and the year-ago number by 54.8%.

The upside largely came on the back of an augmented top line coupled with a decline in expenses, helping expand its margins.

Based on the progress, the company raised its earnings per share projection for 2012 to $1.81–$1.84 from $1.70–$1.74. It also expects net sales to be up to a range of $544 million – $546 million from $540 million –$545 million expected earlier.

Additionally, Heartland Payment approved a new $50 million share repurchase program.

Also, in mid December 2012, in order to broaden its Campus Solution division, Heartland Payment purchased ECSI, Coraopolis-based customized payments processing solutions provider to the education industry.

The Zacks Consensus Estimate for 2012 is $1.63 per share, edging up 0.6% over the last two months, as all analysts raised their estimates. For 2013, all 15 estimates moved higher over the same time frame, lifting the Zacks Consensus Estimate by 0.5% to $1.93 per share.

Other Stocks to Consider

The following payment processors with a favorable Zacks Rank are also performing well and are worth considering.

1) Official Payments Holdings Inc. ( ( OPAY ) ) carries a Zacks #1 Rank (Strong Buy)
2) Equifax Inc. ( EFX - Analyst Report ) holds a Zacks #1 Rank (Strong Buy)

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