Shares of Total System Services, Inc. TSS hit a 52-week high of $56.53 on Dec 7, 2015. Shares seem to have gained from the recent tie-ups and agreements forged by the company and strong third-quarter earnings results with raised 2015 top- and bottom-line estimates.
Over the past 52 weeks, Total System shares have gained 67.8%, significantly higher than the gain of 0.1% by the S&P 500 index.
In Oct 2015, the company signed a new five-year contract with Tangerine Bank in Canada and a new seven-year contract with Atlanticus Holdings formally known as CompuCredit. Recently, it also signed contract extensions with Premiere Bank, ING Bank, Metro Bank, First Hawaiian Bank and Servis1st Bank.
The company also launched Apple Pay in the U.K. and TSYS was the only third-party issuer processor ready for the delivery of this major payments event. The company is now supporting 24 clients in North America and the U.K. for Apple Pay, Android Pay and Samsung Pay and is expecting to add several more by year end.
Investors are also impressed by the company’s ability to integrate and derive synergies from the acquisition of NetSpend which was made back in 2013. NetSpend posted the 15th consecutive quarter of double-digit revenue growth in the last reported quarter. The unit is poised for further grow given a series of key extensions and agreements that it has made. It signed a multi-year distribution relationship with Rite Aid, the third largest pharmacy chain in the United States. NetSpend also signed a five-year renewal contract for its distribution relationship with a retail aggregator who assists in delivering NetSpend, PayPal and Western Union branded products through their tier 1 retail convenience, pharmacy and dollar stores.
Investors are also sanguine about the guidance increase. Total revenue guidance has been pulled up to a growth range of 11% to 12% from 9% to 11% previously. It also revised up its revenues before reimbursables guidance from the previous 10% to 12% growth range to 12% and 13%. Full-year adjusted EPS from continuing operations guidance was upped to the growth range of 24% to 26% from the previously guided 15% to 17%. This would result in earnings per share of $2.43 to $2.47.
Total System carries a Zacks Rank #2 (Buy). Some other equally placed stocks in the same industry are Fiserv, Inc. FISV, Global Payments Inc. GPN and Heartland Payment Systems, Inc. HPY.
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