Reasons to Retain Corpay Stock in Your Portfolio

Corpay, Inc. CPAY has had an impressive run over the past month. Shares have gained 7.7% against the 2.1% decline of the industry it belongs to and the 4.2% rise of the Zacks S&P 500 composite.

The company has an expected long-term (three to five years) earnings per share growth rate of 14.6%. Its earnings are expected to register growth of 12.4% in 2024 and 15.5% in 2025.

Factors That Bode Well

Corpay's top line continues to grow organically, driven by increased volume and revenues per transaction in its payment programs. The company continues to witness solid organic revenue growth, driven by sales, improving retention and business initiatives. Notably, organic revenue growth was 10%, 13%, 12%, 11%, and 10%, respectively, in 2023, 2022, 2021, 2020 and 2019.

CPAY has been consistently pursuing acquisitions and investments, both domestically in the United States and globally, to increase its customer base, workforce, and operational capabilities and expand its range of services across various industries. The September 2023 acquisition of PayByPhone expanded the company's vehicle payment solutions for B2B fleet customers in North America and Europe. In 2023, it also acquired Global Reach Group, Mina Digital Limited and Business Gateway AG. These acquisitions marked a significant expansion of CPAY's product portfolio and geographic presence.

CPAY has a consistent track record of share repurchase. In 2023, 2022, 2021 and 2020, the company repurchased shares worth $686.9 million, $1.41 billion, $1.36 billion and $849.9 million, respectively. Such moves indicate the company's commitment to create value for shareholders and underline its confidence in its business.

A Risk

Corpay has reduced its 2024 revenue guidance from $4.8 billion to $4 billion at the midpoint. The company reduced EPS guidance from $19.40 to $19 at the midpoint. Management lowered the outlook in anticipation of continued softness in lodging revenues, higher interest rates and unfavorable foreign exchange.

Zacks Rank and Stocks to Consider

Corpay currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Fiserv FI and Nu NU.

Fiserv presently carries a Zacks Rank of 2 (Buy).

FI has a long-term earnings growth expectation of 14.3%. It delivered a trailing four-quarter earnings surprise of 2.3%, on average.

Nu currently carries a Zacks Rank of 2. It has a long-term earnings growth expectation of 51.8%. NU delivered a trailing four-quarter earnings surprise of 13.9%, on average.

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