What to Expect When VeriFone Systems (PAY) Reports Earnings Thursday

NEW YORK (TheStreet) -- Shares of VeriFone Systems Inc  (PAY) ended Wednesday's regular trading session up 1.78% to $38.93 on heavy volume, one day ahead of the company's second-quarter earnings release after the market closes tomorrow.

Wall Street is expecting VeriFone to post a profit of 42 cents per share on revenue of $489 million for the period.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says he's watching VeriFone earnings.

The maker of P.O.S. cash-register systems announced today that the company teamed up with Visa (V) to speed up omni-channel commerce worldwide.

The two companies are partnering to create a more streamlined omni-channel commerce experience for its customers.

As part of the partnership, Verifone will connect its point of sale gateway to Visa's CyberSource global merchant payment management platform.

About 1.44 million shares have exchanged hands today, compared to its average trading volume of about 956,425 shares a day.

San Jose, Calif.-based VeriFone is engaged in the secure electronic payment solutions.

Its system solutions consist of point of sale electronic payment devices that run its and third-party operating systems, security and encryption software, and certified payment software, as well as other third-party value-added applications. 

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

"We rate VERIFONE SYSTEMS INC (PAY) 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, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

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

  • The revenue growth greatly exceeded the industry average of 22.5%. Since the same quarter one year prior, revenues rose by 11.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.93, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.15, which illustrates the ability to avoid short-term cash problems.
  • 45.55% is the gross profit margin for VERIFONE SYSTEMS INC which we consider to be strong. Regardless of PAY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PAY's net profit margin of 2.84% is significantly lower than the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the IT Services industry and the overall market, VERIFONE SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: PAY Ratings Report

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