VeriFone Systems' (PAY, Financial) transformational efforts are paying off. VeriFone is now confident of driving growth on the back of key strategies such as product portfolio management, R&D engineering and cost optimization.
Why VeriFone expects to grow
It is counting on its key product lines which are seeing good traction in the market due impressive services. It is further expected to deliver competitive payment terminals. Seeing this growth momentum, VeriFone is now planning to expand payment-as-a-offering platform, also commercialising commerce enabling solution.
The 13% growth in the revenue in the last quarter shows that the company isn’t anyway looking for a look back. This is backed by a solid improvement in the profit margin by 13.9%.
VeriFone is seeing robust growth opportunities in the markets of North America. The business is growing impressively at a 20% improvement on a year-over-year basis. With these positive financials, VeriFone is on the front foot to deliver an impressive balance sheet, generating healthy cash flows. This will surely help VeriFone to strength and attraction in the market, improving the market share.
The company is also focusing on some key initiatives to improve its profitability. Under this, the first thing that it is focusing on is the divestment of the non-core business lines. In addition, it is also focusing on R&D engineering. It is now investing it’s time to maintain the legacy of the products which will help the company to reduce the complexity also eliminating overlap. This will also give VeriFone a competitive advantage over its peers by improving cycle times.
New solutions will act as catalysts
It is mainly focused on improvements and is making transformational efforts to deliver more innovative solutions for its clients. VeriFone is further pleased with the increasing need for the payment terminals as the use of connected devices are increasing rapidly. With this, VeriFone is confident of delivering better results in the upcoming quarters. VeriFone is working closely to develop a next generation of payment terminal. It thinks that this will help the company’s growth strategy moving as it is a powerful platform. This will also help the merchants attract more customers on the back of it and sell more products and services. This will also add meaningfully to company top line in future.
With the growth in the usage of tablets and smartphones, VeriFone is in line its plans to launch new generation of mPOS terminals. This is also expected to be a key driver to the company’s profitability story. In addition, it is also expanding its ECR product line that will help merchants in the developing countries such as Turkey to effectively carry out the payment platform.
In the course of new introductions in the market, VeriFone is launching the next evolution of its premier MX 900 series multilane retail terminals, bringing the latest in security and further expanding its market leading position beyond the United States. Moreover, it is also enhancing its entry level PIN pad products.
Conclusion
Now moving to the fundamentals, the stock doesn’t have a trailing P/E as the company is still making losses. While the forward P/E of 16.57 shows steady earnings growth in the near term. But in the next five years the company’s earnings are disappointing as it is growing at a CAGR of just 8.80% which is lower than the industry average of 16.39%.
All these statistics and valuation shows that the stock might take a downfall in long term while in the near term the earnings are shows good growth so as of now the investors can include VeriFone in their portfolio.
