Shares of Shift4 Payments (FOUR 0.22%) jumped Wednesday after the fintech company reported its third-quarter results. The company is growing profitably and hitting financial records. And these are big reasons that Shift4 stock was up by about 13% as of 2:20 p.m. ET.
Outstanding growth for Shift4
Shift4's fintech services can be used by many different kinds of businesses, but they're increasingly used by operators of large venues such as sports stadiums. The company even has a partnership with Amazon in stadiums.
In Q3, Shift4 grew its gross revenue by 23% year over year to $675 million. Its net income of $46.5 million was basically flat from the prior-year period, but it was still a quarterly record.
Shift4's adjusted profitability increased more than Wall Street expected it to. The company reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $124.5 million. That was up a whopping 46% year over year.
What's next for Shift4 stock?
Shift4 raised its full-year free-cash-flow guidance in light of Q3's results. Previously, it had expected adjusted free cash flow of at least $240 million for the year, but now it expects at least $259 million. This means that Shift4 stock trades at just 17 times this year's expected free cash flow, which is a reasonable valuation given the company's growth rate.
Shift4's business still looks poised for good growth considering that its recent acquisitions will contribute more meaningfully in the current quarter, due to the timing of the acquisitions.
Therefore, for investors looking for good growth, profitability, and a reasonable valuation, Shift4 stock is worthy of further research.
