VeriFone Systems (NYSE:PAY)
Information Technology - IT | Reports June 7, After Market Closes
Key Takeaways
- The Estimize consensus is calling for earnings per share of 54 cents on $529.81 in revenue, 1 cent higher than Wall Street on the bottom line and $2 million on the top
- Consistently strong earnings and a dominant market position hasn’t translated to the stock, which is down nearly 30% in the past 12 months
- VeriFone remains focused on growing its mPOS (mobile point of sale) market and adapting its current systems to digital payment platforms
Payment processor, VeriFone, is scheduled to report fiscal second quarter earnings tomorrow, after the market closes. The company is best known for payment terminals found at a large portion of retailers worldwide. Its industry lead as a provider of electronic payment solutions has proved favorable for earnings. In the past two fiscal years both earnings and revenue have steadily increased with its upcoming results expected to do the same.
The Estimize consensus is calling for earnings per share of 54 cents on $529.81 in revenue, 1 cent higher than Wall Street on the bottom line and $2 million on the top. Compared to a year earlier this represents a 21% increase in earnings and 8% in sales. Per share estimates have increased 6% since its last report, reflecting positive sentiment towards the company. The stock on the other hand has not reacted well to earnings. In the past 12 months shares have dropped 27.6% and typically don’t do well during earnings season.
The recent move to EMV technology has been a key driver of success lately. VeriFone currently services over 29 million system terminals worldwide and growing. Meanwhile, the company has focused on growing its mobile point of sale market (mPos) market while adapting its traditional systems to Apple (NASDAQ:AAPL), Google (NASDAQ:GOOGL) and Samsung (KS:005930) payment platforms. The mPOS market is considered a high growth area in the payment industry which spells big opportunity for VeriFone.
Last quarter, VeriFone continued to delivered strong earnings and even alluded to surpassing guidance for the year. Revenue grew 3% on a sequential basis and nearly 50% from a year earlier. Sales growth was surprisingly strong last quarter despite FX volatility that has hurt other multinationals. Nonetheless, VeriFone saw large declines in Asia and Latin American markets which should persist into Q2. Competition in these rapidly growing markets have put pressure on margins and revenue.
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