Verifone (PAY) Down 12% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Verifone Systems, Inc.PAY . Shares have lost about 12% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
VeriFone Q1 Earnings In Line, Revenues Top Estimates
VeriFone reported first-quarter fiscal 2017 adjusted earnings (excluding all one-time items including stock-based compensation) of $0.12 per share that came in line with the Zacks Consensus Estimate. Non GAAP revenues of $456.6 million topped the consensus mark of $449.1 million. On a year-over-year basis, non GAAP revenues fell 11.1%.
System revenues (58.5% of total revenue) decreased 21.4% year over year to $265.4 million. Rest of the revenues came from the Services division, which increased 7.2% year over year to $188.5 million.
Non-GAAP revenues from North America fell 28.5% from the prior-year quarter to $168.6 million while revenues from EMEA declined 1.3% year over year to $168.1 million. However, revenues from Latin America rose 4% to $57 million and Asia Pacific revenues increased 19.4% to $62.9 million.
The company's non-GAAP gross margin dropped 60 basis points (bps) year over year to 38.9%.
As of Jan. 31, 2017, VeriFone had approximately $147 million in cash compared with $148.4 million as of Oct 31, 2016. Long-term debt totaled$836.6 million at the end of the quarter.
Cash flow from operations in the quarter was $44.7 million. Meanwhile, free cash flow totaled $25 million in the quarter.
VeriFone provided guidance for the second quarter and reiterated its outlook for fiscal 2017.
The company projects non-GAAP revenues of approximately $470 million to $474 million. Non-GAAP earnings per share are expected to be $0.29 for the current quarter.
For fiscal 2017, the company estimates non-GAAP revenues within a range of 1.9 billion to $1.915 billion. Non-GAAP earnings per share are likely to be in the band of$1.35 to $1.39.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to four lower. In the past month, the consensus estimate has shifted lower by 6% due to these changes.
Verifone Systems, Inc. Price and Consensus
At this time, Verifones stock has a nice Growth Score of 'B', however it is doing a bit better on the momentum front with 'A'. Following a similar course, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for momentum investors than value and growth investors.
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.