Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice! As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.
I want to try once again to make this a brief entry. I used to be able to write up these stocks in a paragraph, and lately, I have been writing up long entries explaining a 'pick'.
Heartland Payment Systems (HPY) made the list of top % gainers on the NYSE today and is currently trading at $24.32, up $2.42 or 11.05% on the day. I do not own any shares nor do I have any options on this stock.
Let me briefly go through this stock and explain why
HEARTLAND PAYMENT SYSTEMS (HPY) IS RATED A BUY
First of all, according to the Yahoo "Profile" on Heartland, the company
"...together with its subsidiaries, provides bank card payment processing services to merchants in the United States. Its services involve facilitating the exchange of information and funds between merchants and cardholders' financial institutions; and providing end-to-end electronic payment processing services to merchants, including merchant set-up and training, transaction authorization and electronic draft capture, clearing and settlement, merchant accounting, merchant assistance and support, and risk management. "
Regarding the latest quarter, it was the announcement of 1st quarter 2008 results today, prior to the opening of trading, that drove the stock higher. Total revenues for the quarter came in at $340 million, up 19.5% compared to the $284 million reported in the same year-earlier period.
Net income was $9.0 million, compared to $6.9 million last year and earnings/diluted share worked out to $.23/share, up from $.17/share last year.
The company beat expectations on the revenue and earnings side which, according to analysts polled by Thomson Financial, had been expected to come in at $.21/share on $333 million of revenue.
Longer-term, reviewing the Morningstar.com "5-yr Restated" on Heartland, we can see the steady revenue growth from $422 million in 2003 to $1.3 billion in 2007. Earnings growth has been less steady, dipping from $.62/share in 2003 to $.26/share in 2004, before rebounding steadily to $.90/share in 2007. The company initiated dividends in 2006 paying $.05/share, and increased that payment to $.25/share in 2007. Free cash flow has improved from a negative $(38) million in 2005 to $38 million in 2007.
The balance sheet appears solid with $36 million in cash and $163 million in other current assets which easily covers the $136 million in current liabilities as well as the $27.5 million in long-term liabilities reported on Morningstar.
Using Morningstar for a few Statistics, HYP has a p/e of 24.3 (industry average of 21.5), Price/Book of 4.9 (Industry average of 5.0) and a Price/Sales of 0.7 (Industry average of 3.2). The company is selling at 12.1x free cash flow, vs the industry average of 19.0 and yields 1.3% the same as the industry average.
The forward price/earnings is reported on Morningstar as 15.6 below the industry average of 18.5 and the company has a great PEG ratio of 0.7 vs the industry average of 1.3. The "PEG Payback" is 6.4 years, vs the industry average of 8.6 years.
Finally, Yahoo "Key Statistics" on HPY shows the company with 37.27 million shares outstanding with 21.88 million that float. There were 3.03 million shares out short as of 4/10/08, representing 11.2% of the float o4 a short ratio of 15 trading days. Using my own 3 day rule for short interest, this is quite significant and we may well be witnessing a bit of a squeeze today.
Taking a look at a 'point & figure' chart on Heartland (HPY) from StockCharts.com, we can see a rather uninspiring technical picture, with the stock gradually appreciating from the $18 level back in August, 2005, to a high of $32 in November, 2007. The stock sold off back to $19.50 in March, 2008, only to rally through April into today's price of $24.31. This is not a very strong chart, yet certainly the stock is not overextended either!
To summarize, I like this stock more than I like its chart. They reported a terrific quarter that beat expectations on both revenue and earnings. Their longer-term record is solid and the valuation figures are very attractive with a PEG well under 1.0 and other indices either at or below industry averages.
Anyhow, that's a wrap! I would like to try to keep things briefer around here yet get the information across. If you have any comments or questions, please feel free to leave them on the blog or email me at email@example.com.
Yours in investing,