Shift4 Payments (FOUR) — an integrated payments and commercial technologies solutions provider — released its first quarter results, reporting $400 million in revenues, up 68% YoY, compared to $240 million a year ago, notes Todd Shaver, growth stock specialist and editor of Bull Market Report.
The company posted a profit of $13 million, or $0.15 per share, against a loss of $10 million, or $0.13 per share during the same period last year. We’ve been waiting for the company to be profitable, and last quarter was the turning point.
The company posted strong growth, with end-to-end payment volumes at $13.4 billion, up 68% YoY, compared to $8.0 billion a year-ago, driven largely by partnerships and integrations across key verticals.
Shift4’s partner-centric ecosystem continues to grow, reaching 425 integrations during the quarter, which altogether cover 40% of all hotels and restaurants in the US. The company has built strong high-walled walls around its business, creating strong barriers to entry, and currently remains focused on transitioning from a mere infrastructure company that funnels transactions, to an end-to-end payment platform.
The company has continued to make inroads across verticals, with SkyTab POS, its point-of-sale solution, seeing a 160% YoY growth in a number of locations. Entertainment and sporting venues are another key vertical, with major NBA, NHL, NASCAR, and college football stadiums now processing transactions using Shift4, along with an integration with Paciolan, a leader in digital ticketing and fundraising for sports.
A couple of high profile partnerships with the likes of BetMGM, StarLink, St Jude, and Allegiant Airlines are yet to begin processing, and represent substantial volume growth over the coming quarters. The company’s Finaro acquisition is yet to receive regulatory approval, and is largely seen as Shift4’s gateway into the European commerce markets, a potential $5 billion in additional revenues.
With the stock down by nearly 70% since its peak in April last year, it currently trades at a market cap of just $1.9 billion, which is just 1.2 times sales. This is despite the company’s consistent profitable growth, and positive free cash flow of $70 million.
The company ended the quarter with $1.2 billion in cash, and $1.7 billion in debt. We are surprised that the stock hasn’t been recognized yet by Wall Street. After all, the last four years of revenues are $560 million, $730 million, $765 million and $1.4 billion.
We are sticking to our Price Target of $85. The Sell Price has been lowered to $25. We see this company as a serious sleeper that when it wakes up will be the $100 stock it was a year ago April.