We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Shift4 Payments (FOUR - Free Report) is a Zacks Rank #5 (Strong Sell) that provides integrated payment processing and technology solutions. The company provides a complete omnichannel ecosystem that includes payment and other commerce enabling services.
Here are some more details from the company’s website:
“The company’s technologies help power over 350 software providers in numerous industries, including hospitality, retail, F&B, eCommerce, lodging, gaming, and many more. With over 7,000 sales partners, the company securely processed more than $200 billion in payments volume for over 200,000 businesses in 2019.”
The stock has been a hot one since it’s IPO in July of 2020, up 200% from its debut price around $30 a share. However, investors should be concerned at the high valuations after an earnings miss.
More about FOUR
Shift4 Payments was founded in 1998, is headquartered in Allentown, PA and employs over 1,300. The company is valued just at $7.4 billion and has a PE of 208.
Valuation is the issue here, which is why the stock has a Zacks Style Score of “F” in Value. However, the stock is rated “A” in Growth, which is why the stock price is staying elevated.
Q1 Earnings
Earlier in the month, the company reported Q1 EPS that missed on both the top and bottom line. FOUR reported -$0.13 v the $0.00 expected and revenues came in at $97.5M v the $98.6M expected. The company missed on EBITDA due to a risk loss from a specialty retailer that closed, but raised its FY21 End-to-End payment volume. The revenue outlook was increased by 7%, which isn’t great for a growth company with high valuations.
Estimates
Estimates are bouncing all over the place as analysts seem uncertain just when the company will have that impressive quarter investors are looking for. Some suggest that when hotels and restaurants fully reopen, payment growth will increase.
For next quarter, we see estimates ticking 21% higher over the last month, from $0.19 to $0.23. However, for the current year, estimates have fallen 12% over the same time frame.
Looking out to next year, there has been a dramatic drop in estimates over the last 60 days. Analyst have lowered numbers by 14% in that time frame, from $1.49 to $1.28.
Valuation
Growth stocks get a high valuation in todays market, but investors only give stocks so long to grow into the numbers before they give up. FOUR will need to show this growth in upcoming quarters or risk a more sustained drop than the one suffered after its recent earnings report.
The Technicals
The stock saw a dramatic fall after EPS, falling over 20% from the pre-earnings levels. It has slowly come back and filled that earnings gap to trade right at the 50-day MA. This is the level where the bulls and bears are fighting over the next direction.
If the bulls fail, longer term players might not want to step in until the $70 level, which is where the 200-day moving average resides.
In Summary
FOUR has a lot of great things going for its business, but the stock looks overvalued. Trading only 15% off all-time highs, investors are fighting over the next direction as they struggle with valuation.
The next earnings report is schedule for early August, so perhaps stay away until then. For those interested in the financial transaction service space, Evertec (EVTC - Free Report) might be a better bet. This company is engaged intransaction processingin Latin America and the Caribbean, but is a Zacks Rank #2 (Buy).
More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Bear of the Day: Shift4 Payments (FOUR)
Shift4 Payments (FOUR - Free Report) is a Zacks Rank #5 (Strong Sell) that provides integrated payment processing and technology solutions. The company provides a complete omnichannel ecosystem that includes payment and other commerce enabling services.
Here are some more details from the company’s website:
“The company’s technologies help power over 350 software providers in numerous industries, including hospitality, retail, F&B, eCommerce, lodging, gaming, and many more. With over 7,000 sales partners, the company securely processed more than $200 billion in payments volume for over 200,000 businesses in 2019.”
The stock has been a hot one since it’s IPO in July of 2020, up 200% from its debut price around $30 a share. However, investors should be concerned at the high valuations after an earnings miss.
More about FOUR
Shift4 Payments was founded in 1998, is headquartered in Allentown, PA and employs over 1,300. The company is valued just at $7.4 billion and has a PE of 208.
Valuation is the issue here, which is why the stock has a Zacks Style Score of “F” in Value. However, the stock is rated “A” in Growth, which is why the stock price is staying elevated.
Q1 Earnings
Earlier in the month, the company reported Q1 EPS that missed on both the top and bottom line. FOUR reported -$0.13 v the $0.00 expected and revenues came in at $97.5M v the $98.6M expected. The company missed on EBITDA due to a risk loss from a specialty retailer that closed, but raised its FY21 End-to-End payment volume. The revenue outlook was increased by 7%, which isn’t great for a growth company with high valuations.
Estimates
Estimates are bouncing all over the place as analysts seem uncertain just when the company will have that impressive quarter investors are looking for. Some suggest that when hotels and restaurants fully reopen, payment growth will increase.
For next quarter, we see estimates ticking 21% higher over the last month, from $0.19 to $0.23. However, for the current year, estimates have fallen 12% over the same time frame.
Looking out to next year, there has been a dramatic drop in estimates over the last 60 days. Analyst have lowered numbers by 14% in that time frame, from $1.49 to $1.28.
Valuation
Growth stocks get a high valuation in todays market, but investors only give stocks so long to grow into the numbers before they give up. FOUR will need to show this growth in upcoming quarters or risk a more sustained drop than the one suffered after its recent earnings report.
The Technicals
The stock saw a dramatic fall after EPS, falling over 20% from the pre-earnings levels. It has slowly come back and filled that earnings gap to trade right at the 50-day MA. This is the level where the bulls and bears are fighting over the next direction.
If the bulls fail, longer term players might not want to step in until the $70 level, which is where the 200-day moving average resides.
In Summary
FOUR has a lot of great things going for its business, but the stock looks overvalued. Trading only 15% off all-time highs, investors are fighting over the next direction as they struggle with valuation.
The next earnings report is schedule for early August, so perhaps stay away until then. For those interested in the financial transaction service space, Evertec (EVTC - Free Report) might be a better bet. This company is engaged in transaction processing in Latin America and the Caribbean, but is a Zacks Rank #2 (Buy).
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Click here for the 4 trades >>