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Corpay, Inc. (CPAY - Free Report) has had an impressive run in the past three months. The company’s shares have gained 17.1% compared with the 6.5% rally of its industry and the 2.7% rise of the Zacks S&P 500 composite.
CPAYreported impressive second-quarter 2024 results. Earnings per share of $4.6 beat the consensus estimate by a slight margin and increased 8.6% on a year-over-year basis. The total revenues of $975.7 million surpassed the consensus estimate marginally and increased 2.9% from the year-ago quarter.
How is CPAY Doing?
Corpay’s top line continues to increase organically, driven by increases in both volume and revenues per transaction in its payment programs. CPAY witnesses solid organic revenue growth due to sales, improvement in retention, acquisitions and business initiatives. In 2023, the company’s organic revenues increased 10% year over year. The same rose 13% in 2022 and 12% in 2021.
CPAY utilizes a multi-channel approach to market and sell its solutions to existing and prospective customers. This strategy includes a comprehensive digital channel, direct sales forces and strategic partner relationships. Corpay continues to conduct online expansion and end-to-end capabilities, wherein customers can purchase, onboard and manage their accounts by themselves. This omnichannel strategy assists CPAY’s salespeople to become more efficient by improving their efforts on the lead sourced via digital means.
Acquisitions and investments conducted by the company in the United States and on a global scale increase its customer base, workforce and operational capabilities. It expands its range of services across different industries as well. In 2023, Corpay acquired PayByPhone, a global digital parking payment solutions provider, which expanded its vehicle payment solutions for B2B fleet customers in North America and Europe.
We are impressed with Corpay’s endeavors in rewarding its shareholders through share repurchases. In 2023, the company repurchased shares worth $686.9 million. In 2022, it bought back $1.41 billion worth of shares and $1.36 billion in share repurchase was made in 2021. Such actions indicate the commitment of the company to boost shareholders' value and underline its confidence in its business. These shareholder-friendly initiatives not only increase investor confidence but also positively impact the bottom line.
Meanwhile, Corpay is witnessing higher interest expenses due to a rise in the LIBOR rate and additional borrowings. Interest expenses increased 111.7% year over year in 2023 and 44.8% in 2022. With such a hike in interest expenses, the bottom line can remain under pressure going forward.
CPAY’s current ratio (a measure of liquidity) at the end of the second quarter of 2024 was 1.02, higher than the prior quarter’s 1.07 and the year-ago quarter’s 1.08. A decreasing current ratio does not bode well.
Image: Bigstock
Multi-Channel Approach Benefits CPAY Amid Declining Liquidity
Corpay, Inc. (CPAY - Free Report) has had an impressive run in the past three months. The company’s shares have gained 17.1% compared with the 6.5% rally of its industry and the 2.7% rise of the Zacks S&P 500 composite.
CPAYreported impressive second-quarter 2024 results. Earnings per share of $4.6 beat the consensus estimate by a slight margin and increased 8.6% on a year-over-year basis. The total revenues of $975.7 million surpassed the consensus estimate marginally and increased 2.9% from the year-ago quarter.
How is CPAY Doing?
Corpay’s top line continues to increase organically, driven by increases in both volume and revenues per transaction in its payment programs. CPAY witnesses solid organic revenue growth due to sales, improvement in retention, acquisitions and business initiatives. In 2023, the company’s organic revenues increased 10% year over year. The same rose 13% in 2022 and 12% in 2021.
Corpay, Inc. Revenue (TTM)
Corpay, Inc. revenue-ttm | Corpay, Inc. Quote
CPAY utilizes a multi-channel approach to market and sell its solutions to existing and prospective customers. This strategy includes a comprehensive digital channel, direct sales forces and strategic partner relationships. Corpay continues to conduct online expansion and end-to-end capabilities, wherein customers can purchase, onboard and manage their accounts by themselves. This omnichannel strategy assists CPAY’s salespeople to become more efficient by improving their efforts on the lead sourced via digital means.
Acquisitions and investments conducted by the company in the United States and on a global scale increase its customer base, workforce and operational capabilities. It expands its range of services across different industries as well. In 2023, Corpay acquired PayByPhone, a global digital parking payment solutions provider, which expanded its vehicle payment solutions for B2B fleet customers in North America and Europe.
We are impressed with Corpay’s endeavors in rewarding its shareholders through share repurchases. In 2023, the company repurchased shares worth $686.9 million. In 2022, it bought back $1.41 billion worth of shares and $1.36 billion in share repurchase was made in 2021. Such actions indicate the commitment of the company to boost shareholders' value and underline its confidence in its business. These shareholder-friendly initiatives not only increase investor confidence but also positively impact the bottom line.
Meanwhile, Corpay is witnessing higher interest expenses due to a rise in the LIBOR rate and additional borrowings. Interest expenses increased 111.7% year over year in 2023 and 44.8% in 2022. With such a hike in interest expenses, the bottom line can remain under pressure going forward.
CPAY’s current ratio (a measure of liquidity) at the end of the second quarter of 2024 was 1.02, higher than the prior quarter’s 1.07 and the year-ago quarter’s 1.08. A decreasing current ratio does not bode well.
Zacks Rank & Stocks to Consider
CPAY carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks in the broader Zacks Business Services sector are Evertec (EVTC - Free Report) and Charles River Associates (CRAI - Free Report) .
Evertec sports a Zacks Rank of 1 (Strong Buy) at present. You can seethe complete list of today’s Zacks #1 Rank stocks here.
EVTC has a long-term earnings growth expectation of 8%. It delivered a trailing four-quarter earnings surprise of 11.1%, on average.
Charles River Associates flaunts a Zacks Rank of 1 at present. It has a long-term earnings growth expectation of 16%.
CRAI delivered a trailing four-quarter earnings surprise of 23.5%, on average.