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Why Total System (TSS) Stock Looks More Lucrative Right Now
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The U.S. small business sentiment is at an all-time high now, courtesy of the economic strength that has provided a much-needed boost to business conditions. This fervor of optimism is expected to continue as small businesses anticipate more sales and better business conditions, which should expand their business.
One stock that should definitely gain from this development is the financial transaction service provider Total System Services, Inc. . The company is a leading technology payments provider to small and medium size businesses in the United States. Growth of small businesses thus provides an ample scope for this company. Total System is also poised for growth given an increased use of technology in making payments.
This Zacks Rank #2 (Buy) player has gained 5% since its second-quarter’s earnings results on Jul 24, outperforminmg the industry’s increase of 0.02%.
The stock has also witnessed a respective 3.3% and 3.2% upward revision in the Zacks Consensus Estimate for earnings during 2017 as well as 2018. This in turn, reflects analysts’ bullish sentiment around the stock.
Factors That Make the Stock Attractive
Stellar 2018 Earnings Guidance: Driven by strong second-quarter results and favorable expectations for the remaining year, the company has raised its 2018 view. 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%. Adjusted EPS is expected between $4.3 and $4.4, registering an increase of about 28-31%. The company expects free cash flow for 2018 between $770 million and $800 million. Its upbeat earnings guidance instills investors' confidence in the company.
Consistent Top-Line Growth: The company has seen consistent revenue growth over the past several years. It has witnessed a CAGR of 27% from 2014 to 2017 and the trend continued in the first half of 2018 with revenues rising 12.8% year over year. We believe that the company should retain its revenue momentum in the coming quarters on the back of a strong market position and a lucrative core business that continues to be driven by new deals, renewed agreements, accretive acquisitions and growth of service offerings.
Inorganic Growth: Acquisitions have played an instrumental role in ramping up growth for the company. Some of the notable buyouts come in the form of integrating NetSpend, TransFirst, Cayan into the company’s portfolio alongside purchasing iMobile3 and a minority interest in Central Payment Joint Venture. These deals have enhanced the company’s footprint in the U.S. prepaid card industry, further improving its technology, scale and distribution capabilities plus boosting its merchant acquiring business and deepening the company’s reach in mobile payments space.
Beneficiary of Tax Reform: The company expects reduction in its corporate tax rate for 2018 in the 19 21% band owing to the Tax Cuts and Jobs Act of 2017 compared with last year’s 32-33% effective range. This decline in tax rate should aid margins. The company has plans to accelerate sustainable investments as a direct result of the tax revision to benefit team members, customers and shareholders over the long term.
Financial Strength: The company boasts a strong track of cash flows. Free cash flow has been piling up from the past many years. For 2018, the company expects free cash flow between $770 million to $800 million. It also remains committed to enhance shareholder value via a disciplined capital management. Over the past four years, the company has returned more than $1 billion to shareholders as share repurchases and dividends. The company’s solid free cash flow and deleveraging progress provides an immense investment opportunity to the company.
There seems to be no near-term pullback for the company, given a thriving industry it is placed in along with its robust business and a sturdy balance sheet profile.
Other Stocks to Consider
Other stocks worth considering in the same space include Evertec, Inc. (EVTC - Free Report) , WEX Inc. (WEX - Free Report) and Cardtronics plc . While Cardtronics sports a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank of 2.
Evertec beat estimates in three of the last four quarters with an average positive surprise of 11.8%
Both Cardtronics and WEX Inc. surpassed estimates in each of the trailing four quarters with an average positive surprise of 27.17% and 2.97%, respectively.
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Why Total System (TSS) Stock Looks More Lucrative Right Now
The U.S. small business sentiment is at an all-time high now, courtesy of the economic strength that has provided a much-needed boost to business conditions. This fervor of optimism is expected to continue as small businesses anticipate more sales and better business conditions, which should expand their business.
One stock that should definitely gain from this development is the financial transaction service provider Total System Services, Inc. . The company is a leading technology payments provider to small and medium size businesses in the United States. Growth of small businesses thus provides an ample scope for this company. Total System is also poised for growth given an increased use of technology in making payments.
This Zacks Rank #2 (Buy) player has gained 5% since its second-quarter’s earnings results on Jul 24, outperforminmg the industry’s increase of 0.02%.
The stock has also witnessed a respective 3.3% and 3.2% upward revision in the Zacks Consensus Estimate for earnings during 2017 as well as 2018. This in turn, reflects analysts’ bullish sentiment around the stock.
Factors That Make the Stock Attractive
Stellar 2018 Earnings Guidance: Driven by strong second-quarter results and favorable expectations for the remaining year, the company has raised its 2018 view. 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%. Adjusted EPS is expected between $4.3 and $4.4, registering an increase of about 28-31%. The company expects free cash flow for 2018 between $770 million and $800 million. Its upbeat earnings guidance instills investors' confidence in the company.
Consistent Top-Line Growth: The company has seen consistent revenue growth over the past several years. It has witnessed a CAGR of 27% from 2014 to 2017 and the trend continued in the first half of 2018 with revenues rising 12.8% year over year. We believe that the company should retain its revenue momentum in the coming quarters on the back of a strong market position and a lucrative core business that continues to be driven by new deals, renewed agreements, accretive acquisitions and growth of service offerings.
Inorganic Growth: Acquisitions have played an instrumental role in ramping up growth for the company. Some of the notable buyouts come in the form of integrating NetSpend, TransFirst, Cayan into the company’s portfolio alongside purchasing iMobile3 and a minority interest in Central Payment Joint Venture. These deals have enhanced the company’s footprint in the U.S. prepaid card industry, further improving its technology, scale and distribution capabilities plus boosting its merchant acquiring business and deepening the company’s reach in mobile payments space.
Beneficiary of Tax Reform: The company expects reduction in its corporate tax rate for 2018 in the 19 21% band owing to the Tax Cuts and Jobs Act of 2017 compared with last year’s 32-33% effective range. This decline in tax rate should aid margins. The company has plans to accelerate sustainable investments as a direct result of the tax revision to benefit team members, customers and shareholders over the long term.
Financial Strength: The company boasts a strong track of cash flows. Free cash flow has been piling up from the past many years. For 2018, the company expects free cash flow between $770 million to $800 million. It also remains committed to enhance shareholder value via a disciplined capital management. Over the past four years, the company has returned more than $1 billion to shareholders as share repurchases and dividends. The company’s solid free cash flow and deleveraging progress provides an immense investment opportunity to the company.
There seems to be no near-term pullback for the company, given a thriving industry it is placed in along with its robust business and a sturdy balance sheet profile.
Other Stocks to Consider
Other stocks worth considering in the same space include Evertec, Inc. (EVTC - Free Report) , WEX Inc. (WEX - Free Report) and Cardtronics plc . While Cardtronics sports a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank of 2.
Evertec beat estimates in three of the last four quarters with an average positive surprise of 11.8%
Both Cardtronics and WEX Inc. surpassed estimates in each of the trailing four quarters with an average positive surprise of 27.17% and 2.97%, respectively.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>