Why Is FleetCor Technologies (FLT) Up 5.9% Since Last Earnings Report?
A month has gone by since the last earnings report for FleetCor Technologies (FLT). Shares have added about 5.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is FleetCor Technologies due for a pullback? 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 drivers.
FLEETCOR Surpasses Q2 Earnings & Revenues Estimates
FLEETCOR Technologies, Inc. reported impressive second-quarter 2023 results as both earnings and revenues surpassed the respective Zacks Consensus Estimate.
Adjusted earnings (excluding 99 cents from non-recurring items) of $4.19 per share outpaced the consensus estimate by a slight margin and grew slightly year over year.
Revenues of $948.2 million slightly beat the consensus mark and increased 10.1% year over year on a reported basis.
Let’s check out the numbers in detail.
Revenues in Detail
Product-category-wise, fleet revenues of $382.6 million rose 1% year over year on a reported basis. The figure lagged our estimated $406.2 million.
Corporate Payments revenues of $247 million increased 30% year over year on a reported basis and beat our estimates by 13.5%.
Brazil segment’s revenues of $126.1 million improved 13% year over year, beating our estimated $125.6 million.
Lodging revenues of $136.6 million grew 19.7% year over year on a reported basis and surpassed our estimates by 5.7%.
Other revenues of $56 million increased 1% year over year on a reported basis and were lower than our estimated $66.2 million.
Operating Results
Operating income increased 11% from the prior-year quarter’s level to $412.7 million. Operating income margin increased 50 basis points to 43.5%, in comparison with the prior-year quarter.
Balance Sheet & Cash Flow
FLEETCOR exited second-quarter 2022 with cash, cash equivalents and restricted cash of $1.25 billion, compared with $1.27 billion at the end of the prior quarter.
FLT provided $499 million in net cash from operating activities. Capital expenditures totaled $42.2 million.
Q3 Guidance
Revenues are expected to be between $980 million and $1 billion, raised from previous guided range of $930 million and $950 million.
Adjusted earnings per share are expected to be between $4.44 and $4.64, upgraded from the prior range of $4.02 and $4.22.
Updated 2023 Guidance
Adjusted earnings per share are anticipated to be between $17.09 and $17.35, raised from the prior guidance of $16.95 and $17.35. The lower range of the prior guidance has been increased from $3.82 billion. Revenues are now anticipated to be between $3.84 billion and $3.86 billion.
Interest expenses are now expected between $330 million and $340 million, raised from the prior expectation of $310 million and $330 million.
Tax rate is expected to be approximately between 26% and 27%.
Weighted average fuel prices are expected to be around $3.66 per gallon in US.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, FleetCor Technologies has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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 #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
FleetCor Technologies is part of the Zacks Financial Transaction Services industry. Over the past month, MasterCard (MA), a stock from the same industry, has gained 5%. The company reported its results for the quarter ended June 2023 more than a month ago.
MasterCard reported revenues of $6.27 billion in the last reported quarter, representing a year-over-year change of +14%. EPS of $2.89 for the same period compares with $2.56 a year ago.
For the current quarter, MasterCard is expected to post earnings of $3.20 per share, indicating a change of +19.4% from the year-ago quarter. The Zacks Consensus Estimate has changed 0% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for MasterCard. Also, the stock has a VGM Score of D.
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