Is It Time To Add Heartland Payment To Your Portfolio?

On Jan 6, Zacks Investment Research upgraded Heartland Payment Systems, Inc. HPY to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Heartland Payment witnessed an increase in earnings estimates following a recent acquisition and solid operational performance.

Heartland Payment, the nation's fifth largest payments processor and a premier merchant business solutions provider, acquired XPIENT Solutions. Adding this leading provider of advanced point-of-sale and local transaction management solutions to Heartland Payment's portfolio will enhance the portfolio of its merchants. In addition, it will benefit small and mid-sized restaurant customers with access to a sophisticated system for large operators.

With respect to financial results, the company delivered operating net earnings of 62 cents per share in the third quarter, outperforming the Zacks Consensus Estimate by 3.3%. Net revenue was a record of $169.4 million, up 10.5% year over year driven by transaction processing volume and strong non-card revenue growth. The last reported quarter marked the eighth consecutive quarter of new margin installed growth, up 15.7% from a year ago to a record $21.4 million.

Given a solid quarterly performance, Heartland Payment expects to generate net revenue of $665 million and $670 million, reflecting 11% to 12% growth. The bottom line is expected between $2.33 and $2.37.

These positives resulted in an upward revision in the Zacks Consensus Estimate for 2014 and 2015 over the last 60 days. The same moved up 1.4% to $2.19 for 2014 and by a penny to $2.72 for 2015. The expected long-term earnings growth rate for the stock is 14.3%.

Other Stocks to Consider

Investors interested in the financial transaction service industry can also consider Alliance Data Systems Corporation ADS, Envestnet, Inc. ENV and Xoom Corporation XOOM. All these carry a Zacks Rank #2 (Buy).