Vantiv Stumbles on Q2 Outlook: Buy or Sell?

As I write this, one of my top business services stocks is down nearly 5% after it posted its Q1 earnings report. As much as I hate to see one of my stocks in the red, this pullback has presented a solid buying opportunity. Keep reading for complete details…

For those of you who haven’t heard of Vantiv Inc. (VNTV), this is one of the largest payment processing and technology providers in the country. Vantiv offers a variety of point-of-sale (POS) systems that allow for credit and debit card payments, mobile payments, and gift and prepaid cards. The company also provides online payment services, which range from fraud protection to analytics tools to technical support.

Vantiv serves more than 400,000 merchant locations across the country, with customized solutions for small businesses, restaurants, law firms, hotels, churches and more. Last year alone, Vantiv helped process 21.0 billion payment transactions. Vantiv got a cut of each and every transaction, so that translated to $3.58 billion in revenue last year.

This translates to strong profit potential, as demonstrated by today’s earnings report. Compared with Q1 2016, net revenue climbed 9% to $470.1 million. Over the same period, adjusted earnings jumped 21% to $0.68 per share. Analysts were expecting $0.65 EPS on $469.8 million in revenue, so Vantiv posted a 4.6% earnings surprise and a modest sales surprise.

Vantiv also released its second-quarter and fiscal 2017 outlook. Looking ahead to the second quarter, Vantiv expects to earn between $0.81 and $0.83 per share on between $517 million and $527 million in revenue. This is in line with analysts’ earnings forecast of $0.81 per share, but it’s below their revenue forecast of $ 529.4 million.

VNTV shares dipped on the cautious Q2 sales guidance, but I expect the stock to bounce back. For FY 2017, Vantiv is targeting between $3.22 and $3.29 EPS on between $2.08 billion and $2.12 billion in revenue. This is in line with the Street view of $3.20 EPS on $2.11 billion in revenue.

Vantiv also announced that it will acquire Paymetric, which provides services to the business-to-business (B2B) market, which makes more than $31 trillion in transactions in the U.S. alone. Paymetric automates B2B payment workflows within enterprise systems, including SAP, Oracle and Salesforce. Paymetric also helps to securely store customer information and history. This acquisition is expected to close in Q2 2017.

In the meantime, I consider VNTV a B-rated Buy.


Louis Navellier

Louis Navellier

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