This payments company beat analysts’ estimates by $0.09 last quarter. Wall Street expects the company to grow by double-digits in the next five years.
FleetCor Technologies (FLT)
From Cabot Benjamin Graham Value Investor
FleetCor Technologies (FLT: Max Buy Price 148.63) provides fuel cards, commercial payment and data solutions, lodging and transportation management services, stored value solutions and workforce payment products and services to businesses, retailers and commercial fleets.
FleetCor recently formed a lucrative joint venture with First Data. The two companies will combine their gift card businesses, which will enable both companies to reach more countries with a broader array of offerings.
FleetCor will purchase Cambridge Global Payments, a leading provider of international business-to-business payments. Cambridge, headquartered in Toronto, processes cross-border payments to small and mid-sized businesses. Cambridge will focus on international services, while FleetCor will concentrate on the U.S. market. Cambridge will likely contribute noticeable earnings immediately when the deal closes in the current quarter.
Sales and earnings growth has accelerated during the past four quarters. First-quarter revenue popped 26% and EPS surged 28%, prompted by strong internal growth and more-favorable financial markets in the U.S. Management recently forecast revenue and EPS growth of 20% for the full year 2017.
The stock price has stalled during the past two and one-half years. However, recent strength could lead to meaningful gains during the next year or two. FleetCor doesn’t pay a dividend, but its balance sheet is solid and sales and earnings growth has been exceptional since going public in 2010.
I am confident that FLT will rise 49% to my Min Sell Price of 217.53 within two years. Buy at 148.63 or below.
J. Royden Ward, Cabot Benjamin Graham Value Investor, www.cabotwealth.com, 978-745-5532, July 13, 2017