Partnership with Microsoft Lifted VeriFone’s Stock

Price movement of VeriFone Systems

VeriFone Systems (PAY) has a market cap of $2.6 billion. It rose by 1.6% to close at $23.6 per share as of January 14, 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis is -6.9%, -10.6%, and -15.6%, respectively.

Partnership with Microsoft Lifted VeriFone’s Stock

Technically, the stock has broken the support and is trading below all moving day averages. Currently, PAY is trading 12.1% below its 20-day moving average, 15.4% below its 50-day moving average, and 25.8% below its 200-day moving average.

The iShares Morningstar Small Core ETF (JKJ) invests 0.65% of its holdings in VeriFone Systems. The ETF tracks a market-cap-weighted index of US small-cap core stocks. The index selects stocks from 90% to 97% of market cap that fall into Morningstar’s core style organization. The YTD price movement of JKJ is -6.1% as of January 13, 2016.

The market caps of VeriFone’s competitors are as follows:

  • Paypal Holdings (PYPL) — $40.2 billion
  • NCR Corporation (NCR) — $3.5 billion
  • Heartland Payment Systems (HPY) — $3.3 billion

VeriFone and partnership with Microsoft

VeriFone Systems has announced a partnership with Microsoft to provide EMV-ready “Payment as a Service” solutions certified for Microsoft’s Dynamics AX for Retails and Commerce solutions.

Performance of VeriFone in fiscal 4Q15 and fiscal 2015

VeriFone Systems (PAY) reported fiscal 4Q15 total revenue of $514.1 million, a rise of 4.8% when compared to total revenue of $490.5 million in fiscal 4Q14. Its net income and EPS (earnings per share) rose to $38.2 million and $0.33, respectively, in fiscal 4Q15, as compared to net income and EPS of $31.1 million and $0.27, respectively, in fiscal 4Q14. Its non-GAAP[1. Generally accepted accounting principles] net income and non-GAAP EPS rose to $56.2 million and $0.49, respectively, in fiscal 4Q15, or rises of 12.2% and 11.4%, respectively, as compared to the prior year period.

Fiscal 2015 results

In fiscal 2015, VeriFone reported total revenue of $2,000.5 million, a rise of 7.0% year-over-year. Its net income and EPS rose to $79.1 million and $0.68, respectively, in fiscal 2015, as compared to net income and EPS of -$38.1 million and -$0.34, respectively, in fiscal 2014.

Meanwhile, cash and cash equivalents fell by 16.5%, and inventory rose by 4.3% in fiscal 2015. Its debt-to-equity ratio rose to 1.6 in fiscal 2015, as compared a debt-to-equity ratio of 1.5 in fiscal 2014.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of VeriFone are 34.8x and 3.0x, respectively, as of January 14, 2016.

Projections

The company has projected the following for fiscal 1Q16:

  • non-GAAP net revenues of $500.0 million
  • non-GAAP diluted EPS of $0.45

Additionally, VeriFone expects the following for fiscal 2016:

  • non-GAAP net revenue in the range of $2,090.0 to $2,110.0 million
  • non-GAAP diluted EPS in the range of $2.15 to $2.17

These projections reflect North American revenue growth of 5% and don’t reflect revenue from pending acquisitions.