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Why Worldpay, Inc. Stock Gained 18.5% in August

By Keith Noonan – Sep 11, 2018 at 11:17AM

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Worldpay delivered solid sales growth and expanding margins in its second quarterly report since combining with Vantiv.

What happened

Shares of Worldpay, Inc. (WP) climbed 18.5% in August, according to data provided by S&P Global Market Intelligence. The stock's gains came on the heels of its strong second-quarter earnings results and helped push the stock's year-to-date gains above 30%.

WP Chart

WP data by YCharts.

The payment processing company published second-quarter earnings results on Aug. 9, with both sales and earnings for the period topping the market's expectations. Worldpay also raised its full-year guidance despite expectations for ongoing currency headwinds.

A dollar sign within concentric circles.

Image source: Getty Images.

So what

On paper, sales for Worldpay's quarter ended in June soared roughly 91% to reach $1.01 billion and beat the average analyst estimate's call for sales of roughly $970 million. However, this picture overstates the growth picture because the comparable quarter in 2017 was prior to Worldpay's acquisition by Vantiv, Inc. -- another company in the payment processing space.

Accounting for the combination of the two businesses, sales for the period were up 11% -- or 9% on a currency-adjusted basis. However, the company attributed about 1% of its quarterly sales increase to its acquisition of Paymetric. Worldpay's adjusted net income increased 25% year over year to $1.04, topping the average analyst estimate's call for per-share earnings of $0.95.

Now what

Worldpay raised its full-year revenue target from between $3.81 billion and $3.90 billion to sales of between $3.88 million to $3.93 billion. The company is also seeing improving margins and now expects adjusted earnings per share to come in between $3.93 to $4 for 2018, up from its previous guidance for adjusted net income per share between $3.71 and $3.81. Hitting the midpoint of its new target would have the company on track to deliver roughly 18% annual earnings growth. Shares trade at roughly 24.5 times this year's expected earnings. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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