Why Vantiv (VNTV) Stock Is Up Today

NEW YORK (TheStreet) -- Vantiv (VNTV) is gaining 3.1% to $29.82 Monday following reports that it is close to a $1.65 billion acquisition of Mercury Payment Systems.

According to Bloomberg Vantiv could announce the deal as early as today, citing anonymous sources familiar with the matter. Mercury filed for an initial public offering in March.

Must read: Warren Buffett's 10 Favorite Growth Stocks

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TheStreet Ratings team rates VANTIV INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate VANTIV INC (VNTV) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow."

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

  • The revenue growth came in higher than the industry average of 16.3%. Since the same quarter one year prior, revenues slightly increased by 8.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 7.7% when compared to the same quarter one year prior, going from $26.12 million to $28.14 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the IT Services industry and the overall market on the basis of return on equity, VANTIV INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The debt-to-equity ratio is very high at 2.34 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, VNTV has a quick ratio of 0.58, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has decreased to $84.70 million or 45.86% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: VNTV Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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