Total System Services, Inc. 's TSS third-quarter 2018 earnings per share of $1.16 surpassed the Zacks Consensus Estimate by 6.4% and surged nearly 32% year over year. Exceptional performances by all three segments have contributed to this favorable result.
Total System Services, Inc. Price, Consensus and EPS Surprise
Total revenues were $1.01 billion, down 18.6% year over year, primarily due to the adoption of Accounting Standards Codification (ASC) 606. However, it beat the Zacks Consensus Estimate by 7.1%.
The company reported adjusted EBITDA of $348.5 million, up 12.6% from the year-ago quarter.
In the third quarter, net revenues for this segment rose 8.3% year over year to $434 million, driven by a 12% increase in total transaction year over year.
Operating income of $154 million was up 4.3% year over year. Operating margin of 35.5% contracted 130 basis points (bps) from the year-earlier period.
Net revenues rose 22.9% to $346.3 million. It was mainly backed by increased point-of-sale transactions, Cayan's strong performance and solid organic growth in its pre-Cayan business. Dollar sales volume for the segment expanded 30% year over year to $40.9 billion.
Operating income improved 21.2% to $125.1 million while operating margin declined 50 basis points to 36.1% from the prior-year period.
Net revenues for this segment amounted to $195 million, up 8.8%. This upside is attributable to 11.2% growth in GDV (gross domestic value) and a solid contribution across all four distribution channels.
Operating income inched up 1.9% to $49.5 million while operating margin decreased 170 basis points to 25.3%.
Total assets jumped 18% from the level as of Dec 31, 2017 to $7.5 billion as of Sep 30, 2018.
Total shareholders' equity climbed to $2.6 billion on Sep 30, 2018 from $2.2 billion at the end of Dec 2017.
Free cash flow for the first nine months of 2018 totaled $612.4 million, up 11.3% from the same time frame in 2017.
Driven by strong third-quarter results and favorable expectations for the remaining year, the company has raised its 2018 view. It estimates total revenues on a GAAP basis in the range of $3.9-$4 billion, down 19-18%. On a non-GAAP basis, net revenues are anticipated in the band of $3.7-$3.8 billion, reflecting 11-13% year-over-year growth.
GAAP EPS will likely be in the $3.09-$3.15 band, down 2-0% from the year-earlier quarter. Adjusted EPS is forecast between $4.41 and $4.47, up from the earlier projection of $4.3-$4.4. This in turn, reflects an increase of about 31-33%.
Total System Services carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Stocks to Consider
Some stocks worth considering from the finance sector with the perfect combination of elements to surpass estimates in the next releases are as follows:
Ameriprise Financial, Inc. AMP is set to report third-quarter earnings on Oct 23. This #2 Ranked stock has an Earnings ESP of +4.30%.
Banc of California, Inc. BANC has an Earnings ESP of +6.95%. The company with a Zacks Rank of 2 is scheduled to announce third-quarter earnings on Oct 25.
Discover Financial Services DFS is slated to release third-quarter 2018 earnings on Oct 25. The stock has an Earnings ESP of +0.54% and a Zacks Rank #2.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.