Seeking Alpha: Heartland Payment Once Again Going Off On Its Own

If you're a company involved in payment processing, you've likely been seeing a good run in your share price. Although I didn't think Heartland Payment Systems (NYSE:HPY) looked particularly cheap back in July of 2014, the whole sector has done well since then. Heartland is up about 20% since that piece, with Vantiv (NYSE:VNTV) up a similar amount, Total System Services (NYSE:TSS) up almost 30%, and Global Payments (NYSE:GPN) up almost 40%.

I admit to being more than a little surprised by this run at Heartland Payment. I like the company's small/medium enterprise focus in card processing and the company's commitment to price transparency. I also like the efforts to diversify the revenue base, but the company has had some missteps with its acquisitions and margin leverage has stalled as the company invests for what management hopes will be a new leg of growth.

Already wrong once, I'm hesitant to beat the drum again and argue that Heartland is overpriced. The market certainly already expects a lot from a cash flow perspective, as high single-digit net revenue growth (10 years, annualized) and 20%-plus FCF growth rate (with long-term FCF margins in the high teens) isn't enough to get to today's price. On the other hand, management is recrafting itself as a provider of payment technology services to SMEs and targeting significant margin leverage in its non-card operations, as well as looking to integrated point of sale systems to generate sticky revenue. With the shares trading inline with near-term EBITDA growth prospects, I suppose there's still a play here for more aggressive investors.

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Heartland Payment Once Again Going Off On Its Own