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DST Systems (DST) Stock Up 34% This Year So Far: Here's Why
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DST Systems Inc. has gained 34% in the year-to-date period, substantially outperforming the 6.5% rally of the industry it belongs to.
This upside is primarily attributable to the company’s announcement of being acquired by SS&C Technologies Holdings (SSNC - Free Report) last month. Although some shareholders rights law firms are still investigating the best price of the deal, we believe the transaction will result in enhancement of DST Systems’ overall shareholders’ wealth.
This is because for the past year, the company has been struggling with sustained decline in registered accounts and escalating operating expenses, which put its fundamentals under pressure.
Notably, the company’s last few quarterly results were affected by client migrations, reduction in membership and decline in healthcare technology spending resulting from changes in government policies.
Moreover, total cost and operating expenses increased 62% from the year-ago quarter to a hefty $481 million. This, in turn, put pressure on the company’s margin. Operating margin contracted 590 basis points on a year-over-year basis to 13% in the quarter.
The combination of its businesses with that of SS&C will be in best interest of shareholders as the transaction will enhance the combined companies’ capabilities, market share and generate cost synergies, thereby boosting revenues as well as earnings.
Furthermore, we expect steady contributions from acquisitions to support revenue growth. Notably, last year, DST Systems acquired State Street's ownership interest in both Boston Financial Data Services, Inc. ("BFDS") and International Financial Data Services Limited (IFDS U.K.), which helped it to register 48.9% year-over-year revenue growth in fourth-quarter 2017.
Paycom and NVIDIA have a long-term expected EPS growth rate of 25.8% and 10.3%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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DST Systems (DST) Stock Up 34% This Year So Far: Here's Why
DST Systems Inc. has gained 34% in the year-to-date period, substantially outperforming the 6.5% rally of the industry it belongs to.
This upside is primarily attributable to the company’s announcement of being acquired by SS&C Technologies Holdings (SSNC - Free Report) last month. Although some shareholders rights law firms are still investigating the best price of the deal, we believe the transaction will result in enhancement of DST Systems’ overall shareholders’ wealth.
This is because for the past year, the company has been struggling with sustained decline in registered accounts and escalating operating expenses, which put its fundamentals under pressure.
Notably, the company’s last few quarterly results were affected by client migrations, reduction in membership and decline in healthcare technology spending resulting from changes in government policies.
Moreover, total cost and operating expenses increased 62% from the year-ago quarter to a hefty $481 million. This, in turn, put pressure on the company’s margin. Operating margin contracted 590 basis points on a year-over-year basis to 13% in the quarter.
The combination of its businesses with that of SS&C will be in best interest of shareholders as the transaction will enhance the combined companies’ capabilities, market share and generate cost synergies, thereby boosting revenues as well as earnings.
Furthermore, we expect steady contributions from acquisitions to support revenue growth. Notably, last year, DST Systems acquired State Street's ownership interest in both Boston Financial Data Services, Inc. ("BFDS") and International Financial Data Services Limited (IFDS U.K.), which helped it to register 48.9% year-over-year revenue growth in fourth-quarter 2017.
DST Systems, Inc. Revenue (TTM)
DST Systems, Inc. Revenue (TTM) | DST Systems, Inc. Quote
DST Systems sports a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
Other top-ranked stocks in the broader technology sector include Paycom Software (PAYC - Free Report) and NVIDIA Corporation (NVDA - Free Report) . Both the stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Paycom and NVIDIA have a long-term expected EPS growth rate of 25.8% and 10.3%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>