A prudent investment decision involves buying stocks that have solid prospects and selling those that carry risks. At times, it is rational to hold certain stocks that have enough potential but are weighed down by tough market conditions.
Here we discuss about First Data Corporation FDC, a stock with an expected long-term earnings per share growth rate of 10.7%. In a year’s time, the stock has rallied 36.2%, outperforming the 10% increase of the industry it belongs to.
We believe First Data has the potential to exceed expectations moving ahead. The reasons behind our optimism include the company’s benefits from acquisitions and a strong enterprise business.
Business Segmentation Supports Global Expansion
First Data has designed its business segments in a manner that supports global expansion. Appropriate segmentation of business allows the company to strengthen its global client base and further globalize its offerings.
First Data’s comprehensive offerings include retail point-of-sale, e-commerce services, credit solutions, next generation offerings such as mobile payment services, webstore-in-a-box solutions, cloud-based point-of-sale operating system and value added solutions.
Acquisitions Helping to Globalize Offerings
First Data is active on the acquisition front. Acquisition of BluePay, Acculynk and CardConnect are significant addition to the company’s product portfolio. BluePay will allow First Data to expand its market share in the high growth integrated payments space.
The Acculynk acquisition is expected to expand First Data’s extensive payments portfolio. CardConnect was First Data’s peer payment processor and its long time distribution partner. Its acquisition will help First Data to boost its financial technology capacities.
Moreover, the addition of CardConnect’s invoice-to-cash processing capabilities will open vast opportunities for First Data in the ERP space and help it better manage cash and other services for clients. First Data can now better focus on globalizing its offerings and strategic partnerships along with boosting its business around enterprise clients.
First Data Corporation Net Income (TTM)
Enterprise Business in Good Shape
First Data’s Enterprise Business is doing well. The company differentiates itself in this space by consistently offering new features and solutions to existing clients while making continuous efforts to expand its client base. First Data continues to expand its enterprise business through client wins. It has healthy business around large and small banks. A strong and comprehensive product suite increases receptivity and offers good opportunities to grow organically.
Zacks Rank & Key Picks
Currently, First Data carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Business Services sector are CRA International CRAI, NV5 Global NVEE and Information Services Group III. While CRA International sports a Zacks Rank #1, NV5 Global and Information Services Group carry a Zacks Rank #2 (Buy).
CRA International, NV5 Global and Information Services Group have delivered an average four-quarter positive earnings surprise of 58.3%, 12.7% and 5.5%, respectively.
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