VeriFone Systems, Inc. - Momentum

VeriFone Systems, Inc. (PAY) recently hit a new multi-year high at $29.54 after reporting an solid Q3 earnings surprise of 8% in late August.

Third-Quarter Results

Revenue for the period was up 24% from last year to a record $262 million. Earnings also came in strong at 28 cents per share, 8% ahead of the Zacks Consensus, moving the company's average earnings surprise to 11%.

The company's strong performance was driven by an impressive mix of domestic and international business, with Latin American revenue up 73% from last year and North American revenue up 39%.

CEO Douglas Bergeron noted that VeriFone continues to advance its agenda of evolving into a services based company while increasing its market share in its legacy businesses, with its services revenue was up 66% from last year.

Estimates

We have seen some movement in estimates over the last month off the good quarter, with the current year adding 10 cents to $1.11 and the next-year estimate adding 17 cents to $1.39, a bullish 26% growth projection.

Valuation

With a forward P/E of 25X, PAY trades at a sharp premium to its peer average of 16X.

6-Month Chart

PAY recently hit a new multi-year high after jumping higher on the good quarter. But in spite of the solid upward momentum, the stochastic below the chart is signaling that shares are trading well away from overbought territory. Take a look at the chart below.

Read the July 12 PAY article here

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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
 
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