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TheStreet Open House

Will This Acquisition Help Heartland Payment Systems (HPY) Stock?

NEW YORK (TheStreet) -- Heartland Payment Systems Inc. (HPY), a provider of bankcard payment processing services, announced it has purchased the privately held company Leaf, for an undisclosed amount.

Leaf is a creator of a mobile point of sale tablet specifically designed for commerce.

Heartland said that in September 2013 that it made a $20 million investment in Leaf, and has now bought the remaining minority interest.

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Shares of Heartland Payment Systems are up 0.19% to $47.25 in late afternoon trading on Thursday.

Separately, TheStreet Ratings team rates HEARTLAND PAYMENT SYSTEMS as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate HEARTLAND PAYMENT SYSTEMS (HPY) 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 revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 12.2%. Since the same quarter one year prior, revenues slightly increased by 6.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.83, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.70 is somewhat weak and could be cause for future problems.
  • HEARTLAND PAYMENT SYSTEMS's earnings per share declined by 9.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HEARTLAND PAYMENT SYSTEMS increased its bottom line by earning $1.98 versus $1.61 in the prior year. This year, the market expects an improvement in earnings ($2.37 versus $1.98).
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: HPY Ratings Report
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