FleetCor Technologies (FLT) Down 5.5% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for FleetCor Technologies (FLT). Shares have lost about 5.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is FleetCor Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

FLEETCOR Q1 Earnings & Revenues Beat, 2019 View Up

FLEETCOR Technologies reported strong first-quarter 2019 results wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings of $2.67 per share outpaced the consensus estimate by 5 cents and increased 6.8% year over year. Notably, the reported figure exceeded the company guided range of $2.55-$2.65 per share. Macro-economic environment had a negative impact of 16 cents per share on the bottom line.

Revenues of $621.83 million beat the consensus mark by $16.2 million and increased 6.2% year over year on a reported basis and 11% on a pro-forma and macro adjusted basis. Organic revenue growth was 11% in the reported quarter, driven by solid double-digit growth across the company’s product categories – fuel, corporate payments, tolls and lodging. Its fuel card business was up 10%, corporate payments increased 18%, toll business grew 15% and lodging business increased 6% organically.

Revenues in Detail

Segment-wise, revenues from North America came in at $396.89 million, up 8.9% year over year. Internationally, revenues of $224.92 million increased 1.7% year over year. Product category-wise, fuel revenues of $283 million increased 7% year over year on a reported basis and 10% on a pro-forma and macro adjusted basis. Corporate Payments revenues of $110.3 million increased 16% year over year on a reported basis and 18% on a pro-forma and macro adjusted basis. Tolls revenues of $88.9 million decreased 1% year over year on a reported basis but improved 15% on a pro-forma and macro adjusted basis.

Lodging revenues of $41.8 million increased 6% year over year on a reported basis as well as on a pro-forma and macro adjusted basis. Gift revenues of $48.4 million decreased marginally year over year on a reported basis and 3% on a pro-forma and macro adjusted basis. Other revenues of $49.4 million increased 4% year over year on a reported basis and 9% on a pro-forma and macro adjusted basis.

Operating Results

Operating income increased 9.3% from the prior-year quarter to $284.18 million. Operating income margin rose to 45.7% from 44.4% in the prior-year quarter.

Balance Sheet & Cash Flow

FLEETCOR exited first-quarter 2019 with cash, cash equivalents and restricted cash of approximately $1.37 billion compared with $1.36 billion at the end of the prior quarter. The company generated $297.49 million of net cash from operating activities. Capital expenditures totaled $14.5 million. In the reported quarter, FLEETCOR repurchased shares worth $3.32 million.

Guidance

For second-quarter 2019, the company expects adjusted earnings to be in the range of $2.74-$2.84 per share. The second-quarter guidance includes the dilutive impact of the Nvoicepay acquisition and higher share count.

For 2019, FLEETCOR raised its revenue and adjusted earnings guidance while reaffirming the same for organic revenue growth, adjusted tax rate and interest expense.

Total revenues are now anticipated in the range of $2.60-$2.66 billion compared with the previously guided range of $2.57-$2.63 billion. Adjusted earnings are now expected the range of $11.47-$11.77 per share compared with the prior guided range of $11.40-$11.70 per share. The company continues to expect organic revenues to register 9-11% growth. Adjusted tax rate is anticipated between 23% and 24%. Interest expense is estimated around $160 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, FleetCor Technologies has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, FleetCor Technologies has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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