Why First Data Stock Got Crushed Today

Evan Niu, CFA, The Motley Fool
Updated
0

What happened

Shares of First Data (NYSE: FDC) have gotten crushed today, down by 12% as of 11:30 a.m. EDT, after the company reported third-quarter earnings results. The retail commerce and payment solutions provider cut its profit forecast for the year.

So what

Total revenue in the third quarter was $2.37 billion, while segment revenue excluding reimbursable items came in at $2.16 billion. Analysts had been expecting the latter figure to be $2.2 billion. Non-GAAP net income was $340 million, or $0.35 per share. The consensus estimate had called for $0.36 per share in adjusted profit. Segment EBITDA rose to $815 million, representing an EBITDA margin of 37.8%. First Data generated $671 million in operating cash flow, of which $444 million was free cash flow.

Point of sale station made by First Data
Point of sale station made by First Data

Image source: First Data.

First Data closed two previously announced divestitures during the quarter: its card processing business in Greece and Central and Eastern Europe, and its check remittance processing business.

Now what

"This was another quarter of strong operational execution and performance," CEO Frank Bisignano said in a statement. He continued:

We generated solid top-line contributions from our core merchant acquiring and card issuance businesses as we ramped up new mandates and saw continued strong performance from high-growth businesses including ISV, Clover and our international markets. We also continued to take steps that will enhance our long-term performance by divesting non-core businesses and remain on track to achieve our leverage goals. Heading into the final months of 2018, we expect to close out our best year as a public company with good momentum into 2019 and beyond.

However, the company reduced its full-year guidance, and now expects full-year adjusted earnings per share to be in the range of $1.38 to $1.40, down from its prior outlook of $1.42 to $1.47 per share in adjusted profits. First Data attributed the shortfall to negative impacts associated with foreign currency movements and a "modest dilutive impact" from recent divestitures.

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Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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