How Did Verifone’s Top and Bottom Lines Perform in Fiscal 1Q16?

Price movement of Verifone Systems

Verifone Systems (PAY) has a market capitalization of $2.9 billion. PAY rose by 0.76% to close at $26.56 per share as of March 10, 2016. The stock’s price movements on a weekly, monthly, and year-to-date (or YTD) basis are 5.6%, 28.3%, and -5.2%, respectively.

How Did Verifone’s Top and Bottom Lines Perform in Fiscal 1Q16?

Currently, PAY is trading 11.7% above its 20-day moving average, 10.6% above its 50-day moving average, and 9.7% below its 200-day moving average.

The Vanguard Small-Cap ETF (VB) invests 0.13% of its holdings in Verifone Systems. The ETF tracks the CRSP US Small Cap Index. The market-cap–weighted index includes the bottom 2%–15% of the investable universe. The YTD price movement of VB was -3.5% as of March 9, 2016.

The market capitalizations of Verifone’s competitors are as follows:

  • PayPal Holdings (PYPL) — $47.1 billion
  • NCR (NCR) — $3.4 billion
  • Heartland Payment Systems (HPY) — $3.4 billion

Performance of Verifone in fiscal 1Q16

Verifone Systems reported total fiscal 1Q16 revenues of $513.5 million, a rise of 5.6% compared to total revenues of $486.2 million in fiscal 1Q15. The revenues of its systems and services segments rose by 7.7% and 1.8%, respectively, in fiscal 1Q16 compared to the prior year’s period. The company’s gross profit and operating income rose by 8.1% and 56.0%, respectively, in fiscal 1Q16 compared to fiscal 1Q15.

Verifone’s net income and EPS (earnings per share) rose to $23.5 million and $0.21, respectively, in fiscal 1Q16, compared to $13.8 million and $0.12, respectively, in fiscal 1Q15.

Meanwhile, its cash and cash equivalents fell by 11.1%, and its inventories rose by 5.4% in fiscal 1Q16 compared to fiscal 4Q15. Its current ratio and debt-to-equity ratio rose to 1.46x and 2.0x, respectively, in fiscal 1Q16, compared to 1.45x and 1.7x, respectively, in fiscal 4Q15.

Verifone Systems’ price-to-earnings and price-to-book value ratios are 39.1x and 3.4x, respectively, as of March 10, 2016.

Projections

The company has made the following projections for fiscal 2Q16 and fiscal 2016:

Fiscal 2Q16

  • Non-GAAP (generally accepted accounting principles) net revenues of $530 million
  • Non-GAAP EPS in the range of $0.51–$0.52

Fiscal 2016

  • Non-GAAP net revenues in the range of $2.15 billion–$2.17 billion
  • Non-GAAP EPS in the range of $2.21–$2.24

The company’s fiscal 2016 guidance reflects its better-than-expected performance in 1Q16 and its partial-year revenue contributions. It also reflects the company’s modest EPS accretion from its recent acquisitions of InterCard and AJB Software Design.