Shares of French payments company Worldline plunged by more than 50% this Wednesday following a disappointing Q3 revenue report. The company reported earnings of €1.18 billion, falling short of Citi's €1.22 billion forecast. This shortfall led Worldline to revise its annual guidance amid challenging macroeconomic conditions. According to InvestingPro data, the company's market cap is currently at 2875.87M USD and it has a P/E ratio of 6.47.
The company's performance was notably affected by an economic slowdown in Germany, its largest market. Shares traded at a low of €9.90, marking a steep 57% decline. Despite organic growth in its merchant services business, the company's overall performance fell short of expectations. Jefferies analysts noted a modest 7.6% organic revenue rise to €868 million in the merchant services segment, which was below their €887 million prediction.
Worldline's CEO Gilles Grapinet pointed out the tough macroeconomic environment as a significant factor impacting Q3 results, even with the positive trends in merchant services. "The worsening macro environment impacted our Q3 results despite positive trends in merchant services," Grapinet said.
In response to these developments, Worldline has adjusted its outlook for the year. They now anticipate a reduced organic growth rate of 6% to 7%, down from the initial forecast of 8% to 10%. Additionally, there could be a potential decline in operating margin by approximately 150 basis points compared to last year. This revised guidance reflects the company's struggle to navigate through the current economic slowdown and other market challenges.
InvestingPro Tips suggest that Worldline has high earnings quality with free cash flow exceeding net income and a high shareholder yield. However, the stock has been performing poorly over the last month, trading near its 52-week low. The price has fallen significantly over the last three months and the stock has taken a big hit over the last six months. Despite these challenges, analysts predict the company will be profitable this year. For more insightful tips like these, visit the InvestingPro site.
In terms of metrics, the company's revenue growth has been slowing down recently, with a growth rate of 14.22% as per InvestingPro data. The company's gross profit margin stands at 66.63%, and its operating income margin is at 18.39%. The company's return on assets is 1.93%. Over the past month, the price total return has been -15.35%, and over the past three months, it has been -33.04%.
The company's next earnings date is slated for October 25, 2023. The fair value of the company, as per InvestingPro, is 40.72 USD, which is significantly higher than its current trading price. This suggests that the company may be undervalued at its current price, providing an opportunity for investors.
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