Riding on a strong growth momentum all of this week, shares of Heartland Payment Systems Inc. (HPY) scaled a new 52-week high of $55.87 on Dec 4, jumping 11.8% since the beginning of 2014 and 7.5% since the release of its third-quarter 2014 earnings on Oct 31.
The company’s strong competitive position, led by steady inorganic growth and healthy capital, has driven the share price of this Zacks Rank #3 (Hold) stock to new horizons.
While about 332.3K shares exchanged hands in the latest trading session, average volume of shares traded over the last three months stands at approximately 298.6K. Yesterday’s closing price represents a solid one-year return of about 23.4%, against 15.2% clocked by the S&P 500 index.
Rationale
Being the fifth-largest payments processor and a premier merchant business solutions provider in the U.S., Heartland Payment holds a strong market presence. Additionally, the company has been strengthening its competitive position with acquisitions, the recent being XPIENT Solutions (purchased last month), that offer enterprise-level point-of-sale software solutions to the rapidly growing foodservice industry. The TouchNet acquisition, culminated during the third-quarter, is also on the path of successful integration. These, along with the prior acquisitions of Micros and NCR, are projected to be accretive to earnings sooner than expected.
Alongside, strong strategic alliances with the card giants like Visa Inc. (V), MasterCard Inc. (MA) and American Express Co. (AXP), not only reflect fixed revenue sources but also augur long-term growth. Furthermore, growth in small- and mid-sized enterprises (SME) are accelerating new business wins for Heartland Payment, while internal new product developments are contributing to the company’s growth cycle.
Overall, despite higher debt due to acquisitions, Heartland Payment is able to attract investor attention given its accelerated shareholder return and a compelling long-term growth story. The company distributed about $63.8 million via share buybacks and dividends in the first nine months of 2014 against $47.3 million in the year-ago period.
Heartland Payment also delivered positive earnings surprises in three of the last four quarters, with an average beat of 0.7%. The company’s third-quarter earnings per share of 62 cents also topped the outpaced the Zacks Consensus Estimate by 3.3% and broke-even with the year-ago quarter figure.
Moreover, the long-term growth rate of Heartland Payment is pegged at 14.3%, higher than the peer group’s average of 13.4%.
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