VeriFone Earnings Preview
PAY is set to report its 2016 second quarter financial results today, Tuesday June 7, 2016 after the market close. The consensus is for earnings of $.52 a share on revenues of $530.10 million. PAY is currently trading higher by 7% over the last week and has crossed back above its 200 day simple moving average as it moves into tonight’s report.
Analyst Expectations
Analysts at Pacific Crest, which recently partnered with KeyBanc Capital Markets, had the following comments on PAY leading into this evening’s earnings report.
Verifone reports results after the close on June 7. We expect solid results and see room for a modest beat and raise in line with the beat, but expect an ongoing transition in China and Brazil and product expansion to limit the magnitude of upside. That said, we remain positively biased on the midterm outlook as steady execution should drive improved confidence in the sustainability of mid-teens or better EPS growth, which warrants a market multiple, in our view.
Analyst Commentary North America: We expect a deceleration to the MSD y/y growth range as tough comps from the tier-1 EMV upgrade cycle ensue, but we continue to expect a positive growth rate in the region over the next two years as the later cycle segments (e.g., SMB), TAM expansion (e.g., restaurants, hotels), and petro adoption backdrop (e.g., Gilbarco relationship) remain robust. International: We expect a return to positive growth as comparisons get easier, but still view the region as a work-in-progress given ongoing initiatives in China (e.g., resurfacing at top five banks and expansion into ISO in the second half of CY2016) and Brazil (e.g., expansion of low-cost mPOS portfolio).
Results/Outlook: We see room for a slight revenue and EPS beat given reasonable expectations, but would not expect guidance to move up much more than the outperformance given ongoing international changes and transitions within the United States from tier-1 retailers to other growth drivers. We expect operating margins to slightly improve y/y, but don’t see much room for upside provided ongoing expansion of the product and service offerings.
