Global Payments Continues To Hit The Mark With An Increasingly Tech-Driven Platform

Fintech has continued to perform well, with investors understandably attracted to the strong earnings growth that many of these companies are generating. In the case of Global Payments (GPN), management continues to show the benefits of its tech-enabled payments model, with strong revenue growth and improving margins on lower churn. While the shares went nowhere for basically the first half of the year, strong second quarters earnings have pushed the shares up almost 30% on a year-to-date basis and up about 15% since my last update on the company.

At this point, I think the market has Global Payments more or less accurately priced, but it wouldn’t surprise me if the ongoing enthusiasm for fintech took the shares higher, particularly if third quarter earnings come in strong.

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Global Payments Continues To Hit The Mark With An Increasingly Tech-Driven Platform

Seeking Alpha: VeriFone's New Management Says The Right Things, But Execution Is Key

Say what you like about sell-side research, it can at least tell you which way the wind is blowing about a particular stock. When it comes to VeriFone (PAY), analysts seem eager to forgive-and-forget and buy into the story of a strong turnaround in the making. Given how the stock has been performing, I'd say that investors are taking a similar viewpoint.

I still have my doubts. I like the hire the company made for the CEO position, and I've liked what I've heard from him so far in terms of strategy, but two troubling facts remain. First, mobile payment options are changing the electronic payments world. Second, Ingenico (OTCPK:INGIY) as capitalized on VeriFone's missteps to gain share, and has no plans to let up. I've substantially upgraded my growth expectations in light of the new CEO, but even with that I don't see these shares as a must-own on a GARP basis.

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VeriFone's New Management Says The Right Things, But Execution Is Key

Seeking Alpha: Heartland Payment's New Ventures Make Sense, But Mind The Multiples

With the markets up as much as they are over the past two years, it's not so surprising that there are a lot of stories out there along the lines of "it's a good company and they have a good plan, but be careful about the valuation".

Payment processing service provider Heartland Payments (HPY) definitely fits that description for me. I believe the company's direct sales force and uncommon transparency give it an edge in the processing space. Likewise, I believe the company's forays into newer businesses like payroll and education-related processing can generate worthwhile returns. I just question whether there's a lot of loose change left in the couch for a stock that is up more than 100% over the past two years and trading a little rich relative to its growth.

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Heartland Payment's New Ventures Make Sense, But Mind The Multiples

Seeking Alpha: Wall Street Too Eager To Believe In VeriFone's Turnaround

I have thought for some time now that Wall Street badly wants to believe that VeriFone (PAY) can turn around its business, and the reaction to the company's third quarter earnings backs that up. VeriFone went out of its way to lower the hurdle for this quarter - to a point where a gopher could clear it - but pre-market indications on the stock seem to suggest that this was a meaningful beat for the company. Suffice it to say, I'm not a VeriFone bull. I believe the right CEO hire could make a real difference here, but even a 10% growth estimate doesn't point to much value.

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Wall Street Too Eager To Believe In VeriFone's Turnaround

Investopedia: eBay Seems Undervalued, But Wall Street Will Need Convincing

It has to be a source of frustration to some investors that Amazon (Nasdaq:AMZN) can basically ignore margins and cash flow and get away with it, while eBay (Nasdaq:EBAY) delivers double-digit returns on invested capital and ample free cash flow and doesn't seem to get the same love. Given that the company is likely looking at years of ongoing investments to grow its payments business, that may not change right away. Even so, eBay looks like an underrated cash flow generator, with ample balance sheet flexibility to make additional strategic moves and/or return cash to shareholders.

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http://www.investopedia.com/stock-analysis/071813/ebay-seems-undervalued-wall-street-will-need-convincing-ebay-amzn-pay-intu-aapl.aspx

Investopedia: Wall Street Clearly Underestimating VeriFone's Struggles

Going into this quarter, Wall Street wanted to buy into the idea of a VeriFone (NYSE:PAY) turnaround. Not only were the shares up more than 20% from their low, but the earnings estimate revisions had been pretty mild despite strong share gains at rival Ingenico (Nasdaq:INGIY). Last and not least, instead of being worried about further gains from next-gen payment rivals like eBay (Nasdaq:EBAY), Intuit (Nasdaq:INTU), and Square, many sell-side analysts were speculating as to who was going to buy VeriFone to accelerate their market growth.

Fiscal second quarter results are going to throw a bucket of ice water on a lot of that optimism. Not only are the share losses to Ingenico (and other providers) becoming more apparent, but customer dissatisfaction and industry pricing pressures are looming larger. I won't rule out the possibility that the right CEO hire and the development of a stronger value-added service portfolio could lead to an eventual turnaround at VeriFone, but it's very clearly going to take some time for that to happen.

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Seeking Alpha: VeriFone Takes A Big Swing

While investors in VeriFone (PAY) may feel that the board of directors has tolerated operational mistakes for too long already, a far more definite move was made on Monday. After the close, the company announced that CEO Doug Bergeron is stepping down immediately from his role as CEO and leaving the board of directors. This move certainly brings closure to an executive tenure that had recently turned sour, but it also increases the uncertainty of the company's near-term trajectory. On a longer term basis there would seem to be value in the shares, but there's an uncomfortable amount of hope in that thesis.

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VeriFone Takes A Big Swing

Seeking Alpha: Ingenico Seems To Be Gaining An Edge In Payments

Credit and debit card transactions only continue to grow, but investors have clearly tired of VeriFone's (PAY) uninspiring performance and management missteps. That leaves investors looking to payment processors like Heartland Payment Systems (HPY) or Global Payments (GPN) to play the trend, or European payment and security companies like Gemalto (GTOMY.PK) and VeriFone's co-duopolist Ingenico (INGIY.PK). Unfortunately, not unlike VeriFone a little while ago, it looks like the market already expects a very full growth outlook for Ingenico.

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Ingenico Seems To Be Gaining An Edge In Payments

Seeking Alpha: VeriFone Now A Falling Knife

Questioning the valuation of a growth stock is a good way to fill up your inbox with hostile emails, but VeriFone (PAY) is offering up a case study in why valuation always matters. While the company is still growing, and still has an attractive global market opportunity, multiple missteps have led to a one-two punch of lower estimates and substantially lower multiples on those estimates. Although these shares may finally be resetting to a point where the valuation makes it appealing, management is going to have a long road back to reestablishing credibility with the Street.

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VeriFone Now A Falling Knife

Investopedia: VeriFone Loses The Tailwind Again

Something is going on with VeriFone (NYSE:PAY), and it's not good. Not only is the stock well off its highs, but whatever momentum that the company had gained since its fiscal third quarter miss is likely to evaporate with another miss. Although I don't think VeriFone is a fundamentally flawed business, it may well be transitioning away from that phase of its corporate life where investors look past almost any bad news in the pursuit of growth.

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http://www.investopedia.com/stock-analysis/2012/VeriFone-Loses-The-Tailwind-Again-PAY-INTU-NCR-BKS1214.aspx