FleetCor Technologies Inc. (FLT) raised its guidance for 2012 and delivered an 11.3% positive earnings surprise in the second quarter, marking the sixth quarter of outperformance in the last seven. This Zacks #1 Rank (Strong Buy) provider of fuel cards and workforce payment products also offers an estimated long-term earnings upside of 21.6%.
Solid Second Quarter Results
On August 8, 2012, FleetCor Technologies reported second quarter net income of 69 cents, higher than the Zacks Consensus Estimate of 62 cents and increasing 21.1% from the year-ago earrings.
The top line improved 28% year over year to $171.8 million. The improvement was fueled by a 56.1% surge in the International segment and a 15.5% increase in the North American segment.
Operating expenses escalated 22% to $90.4 million. However, the magnitude of revenue growth was higher than the increase in expense, thereby helping operating income to improve 36% year over year to $81.4 million.
Recently, FleetCor Technologies forayed into the Brazilian market by acquiring CTF Technologies Inc. for $180 million. It also acquired a leading Russian fuel card company and agreed to buy the Mexican assets of NovoPayment's subsidiaries Tebca and Servitebca.
FleetCor Technologies revised its 2012 revenue expectation to between $665 million and $675 million from the prior range of $615 million to $625 million.
The adjusted net income estimate was raised to a range of $235 million to $240 million, from $217 million to $222 million earlier.
Concurrently, adjusted net income per share is estimated between $2.74 and $2.78, up from $2.55 to $2.60.
Positive Estimate Revision
For 2012, the Zacks Consensus Estimate is currently pegged at $2.64, up nearly 7.8% over the last 30 days as all four estimates were revised upward. This also suggests a year-over-year increase of 32.8%.
Likewise for 2013, the Zacks Consensus Estimate of $3.06 improved 10.1% as all four estimates moved upward. The current estimate represents a year-over-year increase of 15.9%.
Shares of FleetCor Technologies are roughly trading at 16.2x the earnings estimate for 2012, a premium of 42% to the peer group average of 11.4x. On a price-to-book (P/B) basis, shares are trading at 3.8x compared with the peer group average of 1.8x. The PEG ratio is 0.74 times, 26.0% below the benchmark of 1 for a fairly priced stock.
FleetCor Technologies has a trailing 12-month ROE of 22.8% compared with the peer group average of 19.9%.
The price and consensus chart below shows that the earnings estimate lines for 2012 and 2013 are fairly above the stock price, indicating that FleetCor Technologies is undervalued.
Headquartered in Norcross, Georgia, FleetCor Technologies was founded in 1986 and offers specialized payment products and services to businesses, commercial fleets, oil companies, petroleum marketers, and government entities. With 2,130 employees it provides services in North America, Latin America and Europe. FleetCor Technologies has a market capitalization of $3.57 billion and competes with U.S. Bancorp (USB) and Wright Express Corp. (WXS).
More From Zacks.com