Please ensure Javascript is enabled for purposes of website accessibility

Why Total System Services, Inc. Dropped Today

By Jordan Wathen - Jan 27, 2016 at 2:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the payments company are plunging on weaker-than-expected earnings, and a credit downgrade.

What: Shares of Total System Services, (TSS) are dropping today on the back of lower-than-expected earnings. Shares are trading down about 12% as of 1:25 p.m. EST.

So what: The company reported adjusted earnings of $0.57 per share, a decrease of 1.6% from the year-ago period, missing analyst expectations of $0.60 per share for the fourth quarter.

Separately, the company announced that it would acquire TransFirst from Vista Equity Partners in an all-cash deal that values the company at about $2.35 billion. TransFirst gives Total System Services more than 235,000 more small and medium-sized business clients in payments, and will make the combined company the sixth-largest U.S. acquirer based on net revenue.

Now what: A slight earnings miss probably wouldn't have been so concerning to Wall Street if it hadn't followed the announcement of an acquisition. S&P downgraded Total System Services from a BBB+ credit to BBB-, noting that the acquisition would increase the company's leverage to the "high-3x area," up from "about 1.5x."

Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Total System Services, Inc. Stock Quote
Total System Services, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.