Shift4 Payments Inc (FOUR, Financial) has recently experienced a notable surge in its stock price, with a 22.56% increase over the past week and a 19.78% gain over the last three months. Currently, the company boasts a market capitalization of $5.25 billion and a stock price of $78.46. According to GuruFocus, the GF Value of Shift4 Payments is estimated at $97.48, suggesting that the stock is modestly undervalued. This valuation marks a shift from three months ago when the stock was considered a possible value trap, with a GF Value then at $109.05.
Overview of Shift4 Payments Inc
Shift4 Payments Inc, operating within the software industry, is a leading provider of integrated payment processing and technology solutions, primarily in the United States. The company offers a comprehensive suite of services including cloud enablement, business intelligence, analytics, and mobile solutions, designed to enhance the value of software suites while simplifying payment acceptance. The majority of the company's revenue is generated domestically.
Assessing Profitability
Shift4 Payments holds a Profitability Rank of 5/10. The company's Operating Margin stands at 6.32%, which is better than 58.91% of its peers in the industry. Additionally, its Return on Equity (ROE) is impressive at 19.05%, surpassing 81.87% of competitors. The Return on Assets (ROA) at 3.42% and Return on Invested Capital (ROIC) at 7.83% also highlight the company's ability to generate earnings relative to its assets and invested capital. Despite these strong figures, Shift4 has only been profitable for two of the past ten years, which is a concern for potential long-term investors.
Growth Trajectory
Shift4 Payments is distinguished by a Growth Rank of 10/10. The company has demonstrated robust growth metrics: a 35.20% 3-Year Revenue Growth Rate per Share and a 20.40% 5-Year Revenue Growth Rate per Share. Looking ahead, the estimated Total Revenue Growth Rate for the next 3 to 5 years is an impressive 28.37%, and the EPS Growth Rate is projected at 42.17%. These figures indicate a strong potential for continued expansion and profitability.
Notable Shareholders
Among the notable investors in Shift4 Payments are Steven Cohen (Trades, Portfolio), holding 1,194,463 shares (1.87% of the company), Joel Greenblatt (Trades, Portfolio) with 58,753 shares (0.09%), and Chuck Royce (Trades, Portfolio) who owns 50,000 shares (0.07%). Their investments underscore a confidence in the company's market strategy and growth potential.
Competitive Landscape
Shift4 Payments competes with several key players in the software industry. Marqeta Inc (MQ, Financial) with a market cap of $2.64 billion, Rapid7 Inc (RPD, Financial) valued at $2.3 billion, and PagSeguro Digital Ltd (PAGS, Financial) with a market cap of $4.15 billion are among its primary competitors. These companies, while smaller in market cap compared to Shift4, represent significant competition in the integrated payment solutions market.
Conclusion
In conclusion, Shift4 Payments Inc's recent stock performance, coupled with its solid profitability metrics and high growth potential, positions it as a compelling investment in the software industry. The company's strategic focus on enhancing software value through integrated payment solutions and technology services has proven effective. Investors should consider the current modest undervaluation as a potential entry point, keeping an eye on the competitive dynamics and the company's ability to maintain its growth trajectory.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
