Heartland Payment Reaches 52-Week High - Analyst Blog

By
A A A

Riding on a steady growth momentum, shares of Heartland Payment Systems Inc. ( HPY ) hit a new 52-week high of $50.44 on Jan 7. This financial transaction service provider's shares have escalated 65.2% since the beginning of 2013.

Moreover, shares of Heartland Payment have jumped about 23% alone, since the company reported its third-quarter 2013 results at the end of October with a positive earnings surprise of 10.7%. The encouraging momentum of this Zacks Rank #2 (Buy) stock is fuelled by improved core growth coupled with a strong competitive position.

Yesterday's closing price represents a robust one-year return of about 60.3% against a return of 25.3% clocked by the S&P 500 index. Average volume of shares traded over the last three months stands at approximately 387.9K.

Earnings Review

On Oct 30, Heartland Payment reported third-quarter operating earnings per share of 62 cents, which noticeably surpassed the Zacks Consensus Estimate of 56 cents and the year-ago quarter number of 49 cents.

Results reflected sturdy growth in card processing and Payroll. Moreover, solid contribution came from Campus Solutions, whereas substantial improvement was also witnessed within Micropayments. The installation of new card margin and same store sales also drove the transaction processing volume within small and mid-sized enterprises.Growth was, however, partially hindered by higher expenses and reduced operating cash flow.

Overall, Heartland Payment enjoys a flexible and simplified capital position. The company also benefits from strategic acquisition and alliances together with a dynamic business mix. The outlook for 2013 along with consistent return of excess capital further boosts investors' confidence in the stock.

Valuation

Further, valuation looks very compelling for Heartland Payment. Both on forward price-to-earnings and price-to-book basis, the shares are trading at a premium of about 15% and 81%, respectively, to the peer group average. Moreover, return on equity of 33.7% and return on assets of 9.1% stood modestly higher than the peer group average. Even estimated long-term earnings growth is pegged at 14.7%, higher than the peer group average of 13.2%.

Some better-ranked financial stocks that warrant a look are Visa Inc. ( V ), Fiserv Inc. ( FISV ) and Alliance Data Systems Corp. ( ADS ). All these stocks carry the same Zacks Rank as Heartland Payment.



ALLIANCE DATA (ADS): Free Stock Analysis Report

FISERV INC (FISV): Free Stock Analysis Report

HEARTLAND PAYMT (HPY): Free Stock Analysis Report

VISA INC-A (V): Free Stock Analysis Report

To read this article on Zacks.com click here.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ADS , FISV , HPY , V

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

100%
100%
100%
68%

Most Active by Volume

84,725,997
  • $6.69 ▼ 5.11%
68,180,500
  • $3.38 ▼ 1.74%
52,748,572
  • $99.02 ▲ 1.38%
40,996,811
  • $74.92 ▼ 0.36%
37,831,986
  • $15.50 ▼ 0.58%
34,013,720
  • $31.98 ▼ 4.31%
32,417,159
  • $25.59 ▼ 0.78%
31,985,971
  • $54.87 ▲ 1.20%
As of 7/28/2014, 04:05 PM