Total System Services Inc. (TSS) recently extended its long-standing agreement with the Royal Bank of Scotland (RBS). Under the terms of the new agreement, the bank will continue providing payment processing and related services to customers in United Kingdom, Ireland and in the United States.
RBS has been a constant support to Total System since its entry in the European market over a decade ago. Together they manage more than 50 million accounts across 35 European clients.
The International Services segment of Total System accounts for 21% of the company’s clients present in Europe, India, Middle East, Africa, Asia Pacific and Brazil. This alliance primarily helps the company to deliver enhanced services to its European clients, thereby boosting the segment’s operating results.
Total System has been in an expansion spree for quite some time now. The company recently expanded its merchant acquiring services by extending its long-term alliances with the First Hawaiian Bank to boost its business portfolio and drive top-line growth. The company also struck a deal with the US-based Veracity Payment Solutions to continue offering card payment solutions. Total System kick-started its first quarter by collaborating with privately-held Pivotal Systems to offer authorization, settlement and dispute resolution services.
These alliances are in sync with the company’s outlook for 2012, wherein Total System intends to increase its total revenue by 2% and operating earnings in the range of 8–12%. The company is expected to release its first quarter results today after the closing bell. The Zacks Consensus Estimate for Total System stands at 30 cents per share compared with 25 cents per share in the year-ago quarter, reflecting a growth of 19.4%.
Total System competes closely with Alliance Data Systems Corporation (ADS). Alliance, too, recently went in for expansion in the Brazilian market to bring their services further in to the interiors of Sao Paolo.
We retain our long term Neutral recommendation on Total System. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.
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