Dj Officer Best Registers 20821 Of Fiserv Inc >Fi

With the increased adoption of digital payments and demand for cryptocurrency, fintech companies' future appears bright. Amid a sea of rising fintech players, PayPal Holdings' recovery is spectacular.

PayPal has experienced both highs and lows in recent years, driven by shifting market dynamics, competitive pressures, and changing consumer behaviors. However, under the leadership of new CEO James Alexander Chriss, the company’s growth story has started to take a new turn. Its recent third-quarter results showed significant progress, reigniting growth. PayPal stock has surged 41% year-to-date, outperforming the S&P 500 Index's gain of 26.4%. Nonetheless, Wall Street expects more than 45% upside next year.

Furthermore, the company’s valuation appears relatively low compared to its historical highs. This presents a buying opportunity for value-oriented investors seeking long-term growth potential in the fintech industry. Let’s find out more.

About PayPal Stock

PayPal, with a market capitalization of $83.2 billion, is a globally recognized and trusted brand, giving it a strong position in the digital payments world. PayPal has diversified its revenue streams by offering Venmo, Xoom, Honey, and Buy Now Pay Later (BNPL) services, as well as cryptocurrency trading to both consumers and enterprises, reducing its reliance on a single service.

PayPal’s Progress Is Noteworthy

PayPal has been on a recovery path since August 2023, when a new member assumed leadership of the C-suite team. According to CNBC, Chriss, the new CEO, stated confidently that he was prepared to "shock the world."

Many analysts believed that PayPal's new growth strategies under the new CEO would turn the company's fortunes around and restore consistent profitability. Following its second-quarter results, Argus Research upgraded PYPL stock, describing the company's progress as "faster than originally expected." And this is what we saw in the third-quarter results.

PayPal's user base expanded significantly in the third quarter, with active accounts increasing by 0.9% to 432 million globally. This resulted in a 9% increase in total payment volume to $422.6 million.

Net revenue increased 6% year on year to $7.8 billion, but fell short of expectations by $43.1 million. Adjusted earnings rose 22% to $1.20 per share, beating analysts' expectations by $0.13.

PayPal had $16.2 billion in cash, cash equivalents, and investments at the end of the period, plus $12.4 billion in debt. The company also reported an adjusted free cash flow balance of $1.5 billion, and repurchased $1.8 billion in shares during the quarter. Continued earnings growth and a strong free cash flow balance should help the company reduce its debt burden.

PayPal's focus on expanding its service offerings bodes well for the future. During the quarter, the company expanded its partnership with Shopify to provide value to their mutual customers. The company also collaborated with Amazon "to bring PayPal Checkout to SMBs, offering Buy with Prime." PayPal intends to allow Prime members to link their Amazon and PayPal accounts to gain additional benefits.

Its cryptocurrency platform enables users to purchase, store, and sell digital currencies using their PayPal and Venmo accounts. It recently introduced a feature that enables U.S. merchants to handle cryptocurrency directly from their PayPal business accounts. This initiative aligns with the growing interest in crypto, and can drive further user engagement.

PayPal sees emerging markets as a significant opportunity, especially as global digital payment adoption accelerates. Collaborations with other fintech companies, such as Adyen and Fiserv , could bolster PayPal’s growth potential in the coming years. Besides China and Hong Kong, it plans to launch PayPal Complete Payments in more markets in 2025.

Due to increased spend on marketing efforts during the holiday season, management expects adjusted EPS to dip by a low to mid-single-digit percentage in the fourth quarter, but revenue to grow by a low single-digit percentage. However, full-year adjusted EPS growth could be in the high teens. In addition, the company plans to generate $6 billion in free cash flow and repurchase $6 billion in shares this year.

Is PayPal Stock a Buy Now On Wall Street?

Following the Q3 results, Susquehanna analyst James Friedman increased the target price for PYPL stock to $94 from $83. Friedman is pleased with the "consistency of new management to deliver transaction margin dollar growth of 8%" during the quarter. Similarly, analysts at JP Morgan, UBS, and Baird all raised their respective target prices for PYPL.

Overall, Wall Street is moderately bullish about PayPal stock. Out of 43 analysts in coverage, 16 rate it a “strong buy,” two recommend a “moderate buy,” 24 rate it a “hold,” and one recommends a “strong sell.”

Based on its mean target price of $86.89, the stock has an upside potential of 1.2%. However, its high price estimate of $125 implies the stock could rally by 45.6% over the next 12 months.

While full-year earnings might decline in 2024, analysts predict that PayPal’s earnings will increase by 7.4% in 2025. Trading at 16.9x forward 2025 projected earnings, PYPL stock seems reasonably valued compared to its five-year historical average P/E ratio of 54.6.

The Bottom Line on PYPL Stock

PayPal's management, under the new CEO, is focused on boosting profitability. Its initiatives to expand its financial services and focus on B2B offerings may drive future growth. While the ongoing progress is noteworthy, there may be short-term volatility. Long-term investors who can weather the short-term headwinds may find PayPal's current price an appealing entry point.

On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

Clean Harbors, Inc. CLH reported mixed third-quarter 2024 results, wherein earnings missed the Zacks Consensus Estimate while revenues beat the same.

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Despite the earnings miss, the stock has gained 10.4% since the earnings release on Oct. 30, 2024.

CLH’s earnings of $2.1 per share lagged the Zacks Consensus Estimate by 1.4% but increased 26.2% from the year-ago quarter’s actual. Total revenues of $1.5 billion surpassed the consensus estimate by 1.3% and increased 12% on a year-over-year basis.

The stock has gained 23.6% over the past six months, outperforming the 10.8% rise of the industry it belongs to and 15% growth of the Zacks S&P 500 composite.

Six Months Price Performance

CLH’s Segmental Revenues

Environmental Services’ (ES) revenues of $1.3 billion grew 13.2% from the year-ago quarter, meeting our estimate. Strong demand for disposal and recycling services due to record volumes of containerized waste and positive pricing momentum has driven this segment’s revenues.

Revenues from Safety-Kleen Sustainability Solutions (SKSS) amounted to $232.1 million, increasing 5.9% on a year-over-year basis and beating our estimate of $230.9 million.

Clean Harbors’ Profitability Performance

Adjusted EBITDA of $301.8 million grew 18.4% from the year-ago quarter and missed our projection of $303.6 million. The adjusted EBITDA margin was 19.7%, up 100 basis points from the year-ago quarter. Strength in the ES segment is expected to have driven the margin.

Segment-wise, adjusted EBITDA for ES amounted to $332.5 million, increasing 15.1% year over year. The figure missed our estimate of $339.5 million. Adjusted EBITDA for SKSS was $41.2 million, up 32.4% from the year-ago quarter and outpacing our estimate of $44.9 million.

Balance Sheet & Cash Flow of CLH

Clean Harbors exited the quarter with cash and cash equivalents of $513.4 compared with $402 million at the end of the preceding quarter. Inventories and supplies were $376.6 million compared with $365.4 million in the second quarter of 2024.

Long-term debt (less current portion) was $2.8 billion, flat with the previous quarter. CLH generated $239.2 million in net cash from operating activities. The capital expenditure amounted to $96.8 million. The adjusted free cash flow utilized was $144.5 million.

CLH’s 2024 Guidance

For 2024, Clean Harbors’ guidance for adjusted EBITDA was lowered to $1.100-$1.120 billion compared with the $1.125-$1.165 billion given in the previous quarter. The adjusted free cash flow guidance was reduced to $280-$320 million from the $350-$390 million provided in the preceding quarter. CapEx is projected to be $410-$440 million.

Clean Harbors currently carries a Zacks Rank #5 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot of CLH’s Peers

Fiserv, Inc. FI reported mixed third-quarter 2024 results.

FI’s adjusted earnings per share (excluding $1.3 from non-recurring items) of $2.3 beat the consensus mark by 2.2% and gained 17.4% year over year. Adjusted revenues of $4.9 billion missed the consensus estimate by a slight margin but rose a tad on a year-over-year basis.

Verisk Analytics Inc. VRSK posted impressive third-quarter 2024 results.

VRSK’s adjusted earnings (excluding 13 cents from non-recurring items) were $1.7 per share, surpassing the Zacks Consensus Estimate by 4.4% and growing 9.9% from the year-ago quarter. Total revenues of $725.3 million beat the consensus estimate marginally and increased 7% on a year-over-year basis.

Zacks Investment Research

Fiserv's stock rallies in 2024 because of its position in the financial services industry and growing business leverage. The company is the #1 choice for payment and card services globally for merchants and financial institutions, growing its reach while its clients deepen penetration of a growing middle class. The growing middle class drives consumption of goods and services across industries and verticals, and with consumption comes the need for financial middlemen like Fiserv. Estimated at over 4 billion in 2024, the middle class is expected to grow by 25% by the decade's end, providing ample opportunity for this fintech that it capitalizes on today.

Fiserv Raises Guidance, Leads Market to New Highs

Fiserv’s FQ3 results were mixed relative to the consensus reported by MarketBeat but are solid nonetheless. The company reported $4.88 in adjusted revenue, up 7% YoY, missing the consensus by only a slim margin. The growth was driven by both segments, with Merchant Solutions up a strong 29% and Financial Solutions up a slower but still solid 9%. Organically, revenue is up by 15% and compounded by a wider margin, which is expected to stick. Adjusted operating margin increased 170 basis points to 40.2%, driving substantial cash flow and free-cash-flow improvement.

Fiserv’s cash flow and free cash flow are central to the investment. It is growing FCF at an accelerated rate, up 23% YTD, sufficient to sustain the company’s growth trajectory while buying back significant amounts of stock. The buybacks topped $1.3 billion in Q3 and $4.3 billion year-to-date, reducing the count by 5.4% at the end of the quarter. The balance sheet reflects the impacts of aggressive share buybacks, including reduced cash and equity, but remains healthy. The company is well-capitalized, has a growing free cash flow, and has low leverage with long-term debt of less than 1x equity.

Guidance and Analysts Trends Provide a Tailwind for Share Prices

The guidance provides strength for Fiserv’s stock price tailwind. The guidance was increased on the top and bottom line, the third increase this year, to levels outpacing the analysts' consensus and likely increased again due to mounting leverage. The company announced several wins with new and existing clients and product innovation that will drive growth over the next few years.

The analysts like the trends in Fiserv’s results and are lifting their estimates for future results and the stock price. The 26 analysts tracked by MarketBeat show a high conviction in the Moderate Buy rating, with 85% of them rating at Buy. The price target lags the market but provides significant technical support, rising nearly 20% following the Q3 release due to revisions. The revisions suggest this stock will move to the high-end range of analysts' targets, a new all-time high near $245.

Fiserv Insiders Sell Shares

Fiserv insiders are selling shares in 2024 but pose no threat to investors. The sales are consistent with activity related to share-based compensation and align with the trends. The insiders sell this stock regularly in small amounts and own less than 2% of shares, so they provide only a weak headwind for the stock price action. Institutions are a more significant force in this market, owning 90% of the shares and buying on balance in 2024.

The price action in Fiserv shares is bullish. The market is rising strongly, supported by multiple tailwinds, including growth, cash flow growth, share repurchases, and sell-side interest, including those of analysts and institutions. The uptrend in share prices will likely continue with this in play, easily hitting the $244 target by mid-2025 and extending the rally to new highs as business growth and capital return continue over the long term.