Earnings Preview: VeriFone Holdings - Analyst Blog

VeriFone Holdings Inc. (PAY) is scheduled to report fiscal fourth quarter and fiscal 2010 results on December 2, 2010.

VeriFone expects revenues between $258 million and $262 million in the fourth quarter, up 18%–21% year over year and almost flat sequentially compared to $261.0 million reported in the third quarter of 2010. The Zacks Consensus Estimate for the fourth quarter is $263.0 million.

Earnings per share (excluding stock based compensation expense and one time charges) are projected around 35 cents – 36 cents. The current Zacks Consensus Estimate is 30 cents, including stock-based compensation expense. 

Management raised its guidance for fiscal 2010 with the release of its third quarter results. The increase in estimates was driven by the recent strong performance of the company in the last few quarters, which in turn was propelled by improved economic conditions leading to a revival in the payment terminal industry.

For fiscal 2010, VeriFone expects revenues between $948 million and $989 million. The Zacks Consensus Estimate for fiscal 2010 is $989 million, the high-end of management's expectations.

VeriFone expects earnings per share for fiscal 2010 to come around $1.26 – $1.27. The current Zacks Consensus Estimate is $1.08, including stock-based compensation expense. 

Estimates have been static in the last thirty days with no movement in either direction. VeriFone has consistently exceeded expectations. In the third quarter, the company reported earnings 7.69% above the Zacks Consensus Estimate. On average, VeriFone has come ahead of the Zacks Consensus Estimate by 11.15% in the last four quarters.

With the economy showing signs of recovery, revenue growth should accelerate in fiscal 2011. Business has revived robustly for the company after the slowdown in fiscal 2009, especially the point of sale (POS), petroleum and taxi businesses. The company plans to expand its footprint in international markets. In an effort to expand in Europe, VeriFone recently announced that it will acquire Hypercom Corp. (HYC) for approximately $7.32 per share or $485 million.

We believe the company is well placed, driven by solid demand for new services, and we see a lot of potential for growth in the coming quarters. Hence, we maintain our Outperform recommendation ahead of the fourth quarter results.

 
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