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Here's Why You Should Retain FLEETCOR (FLR) in Your Portfolio
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FLEETCOR Technologies is gaining from its strategic acquisitions, which are helping it bolster its segmental results. A strong liquidity position supports the company in maintaining its shareholder-friendly behavior. However, foreign currency fluctuations and increasing interest rates are concerning.
FLEETCOR has gained 27.2% in the year-to-date period compared with the industry’s 15.3% growth.
FLEETCOR's robust revenue growth is driven by strategic acquisitions. The company consistently pursues domestic and global investments to expand its customer base, workforce and services. Recent acquisitions, which include Global Reach Group, Mina Digital Limited and Business Gateway AG, have enhanced FLEETCOR's product range and global presence. Revenues for 2023 are expected to grow 12% year over year.
We are pleased with FLEETCOR Technologies' commitment to enhancing shareholder value through share repurchases. In 2022, 2021, 2020, and 2019, the company repurchased shares amounting to $1.41 billion, $1.36 billion, $849.9 million and $694.9 million, respectively. These actions not only demonstrate the company's dedication to creating value for shareholders but also reflect confidence in its business. Such shareholder-friendly initiatives not only boost investor confidence but also have a positive impact on earnings per share.
FLEETCOR’s current ratio (a measure of liquidity) at the end of third-quarter 2023 was pegged at 1.02, higher than the current ratio of 0.99 reported in the year-ago quarter. Increasing current ratio indicates that the company is not likely to have problems meeting its short-term debt obligations.
Risks
FLEETCOR, faces risks from foreign currency exchange rate fluctuations, which impacted revenues by $47 million in 2022. Higher interest expenses, due to increased LIBOR rates and borrowings, amounted to $165 million in 2022, rising 44.8%. Forecasts for 2023 indicate interest expenses to be in the $310-$330 million range, which are likely to pressure the company's bottom line. We expect 2023 interest expense to be $332.6 million, which is approximately double the previous year's figure.
Stocks to Consider
The company currently carries a Zacks Rank of 3 (Hold).
Here are a few better-ranked stocks from the Business Services sector that may be considered
DocuSign (DOCU - Free Report) : The Zacks Consensus Estimate of DocuSign’s 2023 revenues indicates 8.6% growth from the year-ago figure while earnings are expected to grow by 29.1%. The company has beaten the consensus estimate in all four quarters, the average surprise being 27.1%.
Broadridge Financial Solutions (BR - Free Report) : The Zacks Consensus Estimate of Broadridge’s 2023 revenues indicates 7.7% growth from the year-ago figure while earnings are expected to grow by 10.1%. The company has beaten the consensus estimate in three of the past four quarters and matched on one instance, the average surprise being 5.4%.
BR holds a Zacks Rank of 2.
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Here's Why You Should Retain FLEETCOR (FLR) in Your Portfolio
FLEETCOR Technologies is gaining from its strategic acquisitions, which are helping it bolster its segmental results. A strong liquidity position supports the company in maintaining its shareholder-friendly behavior. However, foreign currency fluctuations and increasing interest rates are concerning.
FLEETCOR has gained 27.2% in the year-to-date period compared with the industry’s 15.3% growth.
FleetCor Technologies, Inc. Price
FleetCor Technologies, Inc. price | FleetCor Technologies, Inc. Quote
Factors That Bode Well
FLEETCOR's robust revenue growth is driven by strategic acquisitions. The company consistently pursues domestic and global investments to expand its customer base, workforce and services. Recent acquisitions, which include Global Reach Group, Mina Digital Limited and Business Gateway AG, have enhanced FLEETCOR's product range and global presence. Revenues for 2023 are expected to grow 12% year over year.
We are pleased with FLEETCOR Technologies' commitment to enhancing shareholder value through share repurchases. In 2022, 2021, 2020, and 2019, the company repurchased shares amounting to $1.41 billion, $1.36 billion, $849.9 million and $694.9 million, respectively. These actions not only demonstrate the company's dedication to creating value for shareholders but also reflect confidence in its business. Such shareholder-friendly initiatives not only boost investor confidence but also have a positive impact on earnings per share.
FLEETCOR’s current ratio (a measure of liquidity) at the end of third-quarter 2023 was pegged at 1.02, higher than the current ratio of 0.99 reported in the year-ago quarter. Increasing current ratio indicates that the company is not likely to have problems meeting its short-term debt obligations.
Risks
FLEETCOR, faces risks from foreign currency exchange rate fluctuations, which impacted revenues by $47 million in 2022. Higher interest expenses, due to increased LIBOR rates and borrowings, amounted to $165 million in 2022, rising 44.8%. Forecasts for 2023 indicate interest expenses to be in the $310-$330 million range, which are likely to pressure the company's bottom line. We expect 2023 interest expense to be $332.6 million, which is approximately double the previous year's figure.
Stocks to Consider
The company currently carries a Zacks Rank of 3 (Hold).
Here are a few better-ranked stocks from the Business Services sector that may be considered
DocuSign (DOCU - Free Report) : The Zacks Consensus Estimate of DocuSign’s 2023 revenues indicates 8.6% growth from the year-ago figure while earnings are expected to grow by 29.1%. The company has beaten the consensus estimate in all four quarters, the average surprise being 27.1%.
The company holds a Zacks Rank of 2 and has a VGM Score of B.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Broadridge Financial Solutions (BR - Free Report) : The Zacks Consensus Estimate of Broadridge’s 2023 revenues indicates 7.7% growth from the year-ago figure while earnings are expected to grow by 10.1%. The company has beaten the consensus estimate in three of the past four quarters and matched on one instance, the average surprise being 5.4%.
BR holds a Zacks Rank of 2.