August 9, 2018
I've had August 9 circled on my calendar in anticipation of this moment. Worldpay, Inc. (WP) just reported stunning sales and earnings for the second quarter. Worldpay is one of my favorite plays on the consumer boom. But, after today's spike, can it keep up its winning streak? To find out, continue reading…
Worldpay is one of the country's largest payment processing and technology provers. Worldpay offers point-of-sale (POS) systems that process credit and debit card payments, mobile payments, and payments from gift and prepaid cards. The company also provides online payment services, ranging from fraud protection to analytics tools to technical support.
Last year, the company processed a staggering 23 billion transactions. It also currently serves eleven of the nation's top 25 retailers. To sum it up, Worldpay is a huge player in the payments business. So it benefits directly from rising consumer spending. The more that consumers swipe their debit and credit cards, the more that Worldpay profits.
If you haven't heard of Worldpay, you may have heard its predecessor, Vantiv Inc. In January 2018, Vantiv acquired Worldpay Group plc. The company's ticker symbol changed from VNTV to WP on the NYSE. Together, Vantiv and Worldpay, Inc. are creating a global payments company with the strength to compete across geographies.
And the newly combined company is blowing analysts' expectations out of the water. This morning, Worldpay made a splash with its second-quarter report.
Last quarter, Worldpay's net revenues surged 90% to $1.0 billion. This beat the $980.2 million consensus estimate by 2.0%. Meanwhile, adjusted earnings jumped 99% year-on-year to $327.1 million, or $1.04 per share. Analysts were looking for adjusted earnings of $0.95 per share, so Worldpay posted a 9.5% earnings surprise.
Pleased with these results, company management lifted its full-year financial guidance. It now expects net revenue will range between $3.88 billion and $3.93 billion, representing between 82.9% and 85.4% annual sales growth. WorldPay expects that adjusted earnings will range between $3.93 and $4.00 per share. This works out to between 16.6% and 18.7% annual earnings growth.
All-in-all, this was a stunning report, so WP shares are up over 7% as I write this. I currently recommend WP in my Growth Investornewsletter. Since I added the stock in April 2016, it has surged nearly 75%. For my current trade instructions, Growth Investor members can visit the Buy List here.
If you're not currently a member of Growth Investor, you can visit my Portfolio Grader stock report page to keep on top of my rating for WP. In the meantime, WP is a B-rated Buy.