Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of electronic transaction processor Net 1 Ueps Technologies (UEPS) rocketed as much as 53% during Friday's intraday trading after the company not only beat estimates with its fiscal fourth quarter earnings results, but also issued guidance well above expectations.
So what: On a constant currency basis, quarterly revenue increased 25% year-over-year to $118 million, while fundamental earnings per share grew 22% to $0.28. For reference, analysts were expecting earnings of just $0.19 on $114.36 million in sales.
Better yet, the company also said it expects fiscal 2014 earnings of at least $1.50 per share, or 30% higher than the $1.16 per share for which analysts were looking.
Now what: Despite higher than anticipated volumes, the company managed to compete their bulk enrollment related to its previously affirmed five-year contract with South Africa's Social Security Agency, making it the sole provider of social welfare payments in the country during that period. Net1 CEO Dr. Serge Belamant weighed in, saying "This incredibly complex and complicated exercise and its undeniable success, has once again validated SASSA's decision to award this nationally critical tender to us. It is not surprising that MasterCard this week declared the implementation as the best government social grants payment program worldwide."
Going forward, even after today's pop, investors could still be looking at a bargain, as the stock undoubtedly looks cheap trading at just 7.2 times next year's earnings guidance.
