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On Jul 8, 2015, we issued an updated research report on Total System Services, Inc. TSS.
In April, Total System completed the acquisition of TransFirst. Combining Total System’s merchant business with TransFirst positions the company as the sixth largest U.S. merchant acquirer and the third largest integrated payments’ provider.
Prior to this, the acquisition of NetSpend in 2013 made Total System the second-largest program manager of dollars reloaded in prepaid cards per the Mercator Advisory Group. This not only spread the company’s footprint in the U.S. prepaid card industry but also bolstered its long-term growth through portfolio diversification.
Total System is also seeing organic growth on the strength of its business segments – North America, International, Merchant and NetSpend.
Total System’s principle of returning approximately 75% of its available free cash flow to its shareholders in the form of dividend and share repurchases. In 2014 and 2015, it returned 94.4% and 92.3%, respectively.
Total System pulled up its full-year consolidated guidance based on the completion of the TransFirst acquisition and stronger-than-expected performance in the first quarter. The company expects total revenue growth of 50% to 53%, net revenue growth of 20% to 24% and adjusted earnings per share from continuing operations improvement of 13% to 16%.
Total System will release second-quarter 2016 earnings on Jul 26. The current Zacks Consensus Estimate of 67 cents translates into year-over-year earnings per share growth of 25.9%.
Total System carries a Zacks Rank #2 (Buy). Some other equally ranked stocks in the same industry are Alliance Data Systems Corporation ADS, Fidelity National Information Services, Inc. FIS and Fiserv, Inc. FISV.
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FIDELITY NAT IN (FIS): Free Stock Analysis Report
TOTAL SYS SVC (TSS): Free Stock Analysis Report
FISERV INC (FISV): Free Stock Analysis Report
ALLIANCE DATA (ADS): Free Stock Analysis Report
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