The fuel card and workforce payment products to businesses company announced yesterday that it has agreed to purchase the privately held Comdata Inc. from the portfolio company Ceridian LLC for $3.45 billion.
Comdata provides business-to-business electronic payment solutions and offers fleet, virtual card, and gift card solutions to over 20,000 customers.
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“Comdata’s virtual payments business will add a completely new growth leg to FleetCor. We believe that the combination will result in significant synergies as we implement our operating disciplines to their portfolio of businesses,” said FleetCor CEO Ron Clarke.“We expect the acquisition to be meaningfully accretive to earnings in fiscal year 2015. While our financial leverage will increase, we expect to de-lever quickly from the combined cash flow of the businesses,” FleetCor’s chief financial officer Eric Dey added. Separately, TheStreet Ratings team rates FLEETCOR TECHNOLOGIES INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation: "We rate FLEETCOR TECHNOLOGIES INC (FLT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 12.2%. Since the same quarter one year prior, revenues rose by 23.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FLEETCOR TECHNOLOGIES INC has improved earnings per share by 18.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FLEETCOR TECHNOLOGIES INC increased its bottom line by earning $3.37 versus $2.51 in the prior year. This year, the market expects an improvement in earnings ($5.08 versus $3.37).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the IT Services industry average. The net income increased by 21.1% when compared to the same quarter one year prior, going from $73.10 million to $88.55 million.
- The gross profit margin for FLEETCOR TECHNOLOGIES INC is rather high; currently it is at 57.61%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 32.37% significantly outperformed against the industry average.
- Net operating cash flow has increased to $106.23 million or 10.19% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.06%.
- You can view the full analysis from the report here: FLT Ratings Report