FLEETCOR Technologies, Inc. (FLT - Free Report) is a financial transaction services company that has had an impressive run on the bourses over the past year on multiple tailwinds. Also, we are optimistic about the company’s prospects and believe that the time is right for investors to add the stock to their portfolio.
Let’s take a closer look at the factors that make this Zacks Rank #2 (Buy) stock a compelling choice for investors right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
What Makes It an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run on the bourses over the past year. Shares of FLEETCOR have returned 53.9%, outperforming the 40.8% growth of the industry it belongs to and 24.6% increase of the Zacks S&P 500 composite.
Northward Estimate Revisions: The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. The Zacks Consensus Estimate for 2019 earnings has increased 0.1% over the past 60 days. Earnings estimates for 2020 have moved up 0.2% over the same time period.
Positive Earnings Surprise History: FLEETCOR has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering a positive earnings surprise of 2.1%, on average.
Strong Growth Prospects: The Zacks Consensus Estimate for 2019 earnings is currently pegged at $11.75, indicating year-over-year growth of 11.5%. Moreover, earnings are expected to register 15.2% growth in 2020. The stock has long-term expected earnings per share growth rate of 15.6%.
Growth Drivers: FLEETCOR’s top line continues to grow organically driven by increase in both volume and revenue per transaction in certain of its payment programs. In third-quarter 2019, organic revenue growth was 11%.
Acquisitions are contributing significantly to FLEETCOR’s top line. In 2019, the company acquired Nvoicepay, SOLE Financial, Travelliance and a tuck–in acquisition in its lodging business. While Nvoicepay should expand FLEETCOR’s corporate payments business with full disbursement accounts payable cloud platform, SOLE Financial is expected to extend the company’s payroll and card portfolios and expand its addressable market, thus enabling it better serve small and medium-sized as well as large businesses. Travelliance is likely to expand its lodging business across new international markets and the tuck–in acquisition will boost its presence in the airline segment and add international hotel coverage and capabilities. Notably, during the first nine months of 2019, the company witnessed $15 million of additional revenues from the acquisitions completed in the year.
FLEETCOR is a cash-rich company with a strong balance sheet. As of Sep 30, 2019, the company had cash, cash equivalents and restricted cash of $1.5 billion, with no long-term debt to clear off. This significant amount of cash provides it with the flexibility to pursue acquisitions and other related investments.
Cash-rich companies not only guarantee protection but also reward shareholders from their deep cash balances. In the first nine months of 2019, FLEETCOR repurchased shares worth $59.4 million. In 2018, 2017 and 2016, the company repurchased shares worth $958.7 million, $402.4 million and $187.7 million, respectively.
Other Stocks to Consider
Some other top-ranked stocks in the broader Zacks Business Services sector are S&P Global (SPGI - Free Report) , Accenture (ACN - Free Report) and Booz Allen Hamilton (BAH - Free Report) , each carrying a Zacks Rank #2
Long-term expected EPS (three to five years) growth rate for S&P Global, Accenture and Booz Allen Hamilton is 10%, 10.3% and 13%, respectively.
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