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Looking through the list of top % gainers on the NYSE today, I came across Total System Services (TSS) which closed at $22.04 up $.84 or 3.96% on the day. I do not own any shares nor do I own any options on TSS.
The stock moved higher today after an upgrade by Fulcrum.
I first posted Total System Services (TSS) on Stock Picks Bob's Advice on March 8, 2004, when it was trading at $22.30. The stock has actually gone absolutely nowhere since posting on the blog, and is trading down $(.26) or (1.2)% lower than posting.
According to the Yahoo "Profile" on TSS, the company
provides electronic payment processing and related services to financial and nonfinancial institutions in the United States, Canada, Mexico, Honduras, Puerto Rico, and Europe. Its services include processing retail, commercial, government services, stored value, and debit cards, as well as student loans. TSYS also offers merchant services in Japan; other products and services, including risk management tools and techniques, such as credit evaluation, fraud detection and prevention, and behavior analysis tools; and revenue development tools and customer retention programs, such as loyalty programs and bonus rewards.On October 18, 2005, Total Systems reported 3rd quarter 2005 results. For the quarter ended September 30, 2005, revenue climbed 38% to $422 million, and net income rose to $48.1 million from $39.1 million or $.24/share, up from $.20/share last year during the same period.
Looking longer term at the Morningstar.com "5-Yr Restated" financials on TSS, we can see the steady revenue growth from $.8 billion in 2000 to $1.5 billion in the trailing twelve months (TTM). The graph suggests a recent acceleration of revenue growth. During this period, earnings have steadily improved from $.45/share in 2000 to $.94/share in the TTM. Free cash flow has also improved from $183 million in 2002 to $239 million in the TTM.
The balance sheet, as reported on Morningstar, looks solid with $199.4 million in cash and $306.9 million in other current assets, plenty to cover both the $235.7 million in current liabilities and the $166.3 million in long-term liabilities combined.
What about valuation? According to Yahoo "Key Statistics" on TSS, the market cap is $4.35 billion, making this a large cap stock, the trailing p/e is a reasonable 23.15, with a forward p/e (fye 31-Dec-06) of 19.86. The PEG is a bit steep at 1.44.
Looking at the Fidelity.com eResearch on TSS, the company is in the "Business Software & Services" industrial group. Within this group, the Price/Sales ratio is reasonable at 2.8. Topping this group is Business Objects (BOBJ) at 3.4, BEA Systems (BEAS) at 3.3, Automatic Data Processing (ADP) at 3.1, and First Data (FDC) at 3.1. Following these is Total System Services (TSS) at 2.8 and Fiserv, as the "cheapest" in the group with a Price/Sales ratio of only 2.3.
Going back to Yahoo for some additional statistics, we find that the company has 197.27 million shares outstanding. Of these, 922,130 shares are out short (as of 10/11/05) representing 7.7 trading days of volume. Using my arbitrary 3 day rule, this looks significant to me.
The company also pays a small dividend of $.24/share yielding 1.10%. The last stock split was a 3:2 split in May, 1998.
What about the chart? Looking at a Stockcharts.com "Point & Figure" chart on TSS:
You can see that this stock has gone almost nowhere (!) in the past five years. The stock peaked at $35 in July, 2001, bottomed at $11 in October, 2002, then broke through resistance at $17 in April, 2003. The stock has traded higher above support since then, but has not even reached its 2001 highs. The chart is recently optimistic, but certainly not overvalued.
So what do I think? The latest quarter was great, the Morningstar five year record looks nice, valuation is reasonable, the balance sheet is just fine, and the company even pays a small dividend. On a negative note, the chart looks rather unimpressive. Certainly, this stock hasn't gotten away from anyone since I posted this here in 2004!
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