Given recent discussion surrounding Square and its competitors, I thought this article would be of interest. It compares Square with two of its biggest payment processing competitors, Global Payments (GPN) and First Data Corp (FDC). I include what I wrote about Square below, but if you’re interested in its competition feel free to check out the link below.
By any metric, Square Inc. (NYSE:SQ) is the most expensive of these payment processing stocks. Of course, its valuation is not helped by the stock price’s recent meteoric rise. After the jump following the company’s huge first-quarter beat and raise, Square’s shares are up over 45% year to date. In the past 12 months, the stock price has more than doubled!
After the year’s first quarter, Square’s management guided for 2017’s full-year adjusted EPS to be $0.16 to $0.20. At its current price, this gives shares of Square a forward P/E multiple of just under 100.
I still favor Square over the other choices presented here. For starters, the company has demonstrated incredible growth to justify its steep valuation. In the first quarter, the company reported adjusted revenue of $204 million, a 39% increase year over year. Gross payment volume increased to $13.6 billion, a 33% increase year over year.
I believe this growth will continue. First, the company is developing quite the ecosystem for a payment processor, something its competitors are only just now starting to do. Square uses its payment processing services to get into the door of a business, but it doesn’t stop selling there. Instead, it offers a variety of profitable services that its customers tend to find invaluable. These extra streams of revenue come from data analytics, microloans to small businesses, instant deposit features, and food delivery services.
Second, the company is just beginning to enter international markets. It is now in Australia, Canada, and Japan, and just announced plans to enter the U.K. If Square can capture market share and upsell its lucrative extra services to customers in international markets as its done domestically, its stock price might have a good way yet to climb.
Read the entire article at https://www.fool.com/investing/2017/05/30/which-company-is-t…
Matt
Long SQ
MasterCard (MA), Nestle (NSRGY), PayPal (PYPL), and Verizon (VZ) Ticker Guide
See all my holdings at http://my.fool.com/profile/CMFCochrane/info.aspx