Investors looking for stocks in the Financial Transaction Services sector might want to consider either Evertec (EVTC) or Visa (V) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earni ...

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to ...

Financial Performance and Growth - The company reported a significant reliance on its relationship with Popular, Inc., which contributes a substantial portion of its revenues under the Amended and Restated Master Services Agreement[13] - The company anticipates future growth driven by international expansion and increased capital expenditures, with a focus on enhancing its market position[11] - The company is focused on renewing client contracts on favorable terms to ensure continued revenue growth[13] Technology and Innovation - The company is actively investing in artificial intelligence and machine learning technologies to improve operational efficiency and adapt to evolving regulatory frameworks[13] Risk Management - The company faces risks related to cybersecurity, including potential data breaches that could adversely affect operations[13] - The geographical concentration of the company's business in Puerto Rico presents challenges due to fiscal issues and potential natural disasters impacting government contracts[13] - The company's leverage may limit its ability to raise additional capital and react to economic changes, exposing it to interest rate risk[18] - The company is monitoring foreign exchange fluctuations and capital controls that could impact its costs and earnings[13] Strategic Initiatives - The company is exploring strategic acquisitions, including the anticipated benefits from its merger with Sinqia, which may enhance its service offerings[13] - The company has implemented a stock repurchase plan, which is expected to influence the value of its common stock positively[13] Compliance and Market Position - The company is committed to maintaining compliance with existing and future regulations in the jurisdictions where it operates[13] - Industry data in the report is based on reliable sources, including the 2025 World Payments Report, and management's estimates of market share and position[20] - The company's market share and expectations involve risks and uncertainties, subject to change based on various factors[20]

Financial Data and Key Metrics Changes - Total revenue for 2024 was $845.5 million, a 22% increase year-over-year [8] - Adjusted EBITDA was $340.2 million, up approximately 17% year-over-year, with an adjusted EBITDA margin of 40.2% [10][26] - Adjusted EPS was $3.28, an increase of 16% from the previous year [11][27] - Operating cash flows for the year were approximately $260 million, with $95 million returned to shareholders through share repurchases and dividends [12][39] Business Line Data and Key Metrics Changes - Merchant Acquiring revenue grew by 11% due to pricing initiatives and increased sales volume [9] - Payments Puerto Rico revenue increased by 6%, driven by higher transaction volumes and strong performance from ATH Movil [9] - Business Solutions revenue grew by 7%, attributed to key projects recognized throughout the year [9] - LATAM revenue surged by 62% year-over-year, primarily due to the full-year contribution from Sinqia and organic growth [10][17] Market Data and Key Metrics Changes - Economic conditions in Puerto Rico remained stable, with total employment at its highest since 2009 [13] - Passenger traffic at San Juan Airport grew approximately 9% year-over-year [14] - Puerto Rico received approximately $7 billion in reconstruction funds in 2024, with a similar amount expected for 2025 [16] Company Strategy and Development Direction - The company aims to focus on organic revenue growth, margin optimization, and capital allocation in 2025 [7] - Continued execution of acquisition strategy with two tuck-in deals closed in Q4 2024 [6] - The company is diversifying its revenue mix outside of Puerto Rico, with LATAM contributing approximately 33% of total revenue in 2024 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about economic conditions in Puerto Rico supporting business growth in 2025 [16] - The company anticipates revenue growth of 5.1% to 6.3% for 2025, with adjusted EPS expected to grow between 1.8% and 5.2% [42][43] - Management is confident in navigating the upcoming 10% discount on services starting in October 2025 through cost efficiencies [72] Other Important Information - The company generated a strong liquidity position of approximately $468 million as of December 31, 2024 [12][41] - The net debt position at year-end was $706.8 million, with a weighted average interest rate of approximately 6.45% [40][41] Q&A Session Summary Question: Can you provide midterm guidance for future growth? - Management is currently focused on providing guidance for 2025 due to several moving pieces and changes within the company [56] Question: What is the expected performance of Sinqia in 2025? - Management is optimistic about Sinqia's growth reacceleration, focusing on technology upgrades and customer engagement [63] Question: How is the integration of EVERTEC's processing business into Brazil progressing? - Management is seeing reacceleration in existing businesses and is optimistic about future payment product interest [70] Question: What was the contribution from pricing in the Merchant segment? - The growth in the Merchant segment was approximately one-third from pricing, one-third from volume, and one-third from non-transactional fees [90] Question: What is the state of the M&A market in Latin America? - Management has a good M&A pipeline and is focused on diversifying the company through smart deals [94]

EVERTEC, Inc. (NYSE:EVTC) Q4 2024 Earnings Conference Call February 26, 2025 4:30 PM ET Company Participants Beatriz Brown-Saenz - Investor Relations Morgan Schuessler - President and Chief Executive Officer Joaquin Castrillo - Chief Financial Officer Conference Call Participants Nate Svensson - Deutsche Bank Cris Kennedy - William Blair & Company LLC James Friedman - Susquehanna John Davis - Raymond James Operator Good afternoon, everyone and welcome to EVERTEC's Fourth Quarter 2024 Earnings Conference Cal ...

Fourth Quarter 2024 Earnings Conference Call February 26, 2025 Forward-looking Statements Certain statements in this earnings release constitute "forward-looking statements" within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange ...

Group 1 - Evertec reported quarterly earnings of $0.87 per share, exceeding the Zacks Consensus Estimate of $0.72 per share, and up from $0.62 per share a year ago, representing an earnings surprise of 20.83% [1] - The company achieved revenues of $216.4 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.91%, and an increase from $194.62 million year-over-year [2] - Over the last four quarters, Evertec has consistently surpassed consensus EPS and revenue estimates [2] Group 2 - The stock has underperformed the market, losing about 5.4% since the beginning of the year compared to the S&P 500's gain of 1.3% [3] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.78 for the coming quarter and $3.26 for the current fiscal year [7] - The Zacks Industry Rank indicates that the Financial Transaction Services sector is in the bottom 49% of over 250 Zacks industries, which may impact stock performance [8] Group 3 - The estimate revisions trend for Evertec is currently mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Total revenue for Q4 2024 was $216.4 million, an increase of 11.2% compared to $194.6 million in Q4 2023, with organic growth across all segments and contributions from acquisitions[5]. - GAAP Net Income attributable to common shareholders for Q4 2024 was $40.1 million, a 249% increase from $11.5 million in Q4 2023, resulting in $0.62 per diluted share[6]. - Adjusted EBITDA for Q4 2024 was $88.6 million, a 24% increase compared to the prior year, with an Adjusted EBITDA margin of 40.9%, up from 36.8%[8]. - Full year 2024 revenue reached $845.5 million, a 22% increase from $694.7 million in 2023, driven by acquisitions and organic growth[10]. - GAAP Net Income for the full year 2024 was $112.6 million, a 41% increase from $79.7 million in 2023, equating to $1.73 per diluted share[11]. - Adjusted EBITDA for the full year 2024 was $340.2 million, a 17% increase from the previous year, with an Adjusted EBITDA margin of 40.2%, down from 42.0%[12]. - Revenues for Q4 2024 were $216,395,000, an increase of 11.4% compared to $194,621,000 in Q4 2023[30]. - Net income for the year ended December 31, 2024, was $114,779,000, up from $79,876,000 in 2023, representing a growth of 43.6%[30]. - The company reported a basic net income per share of $1.75 for 2024, compared to $1.23 for 2023, marking a 42.3% increase[30]. - Adjusted EBITDA for the quarter ended December 31, 2024, was $88,610,000, up from $71,698,000 in the same quarter of 2023, reflecting a year-over-year increase of 23.5%[45]. - Total revenues for the year ended December 31, 2024, reached $845,486,000, compared to $694,709,000 in 2023, marking a growth of 21.7%[43]. Shareholder Returns - The company returned $95.2 million to shareholders through share repurchases and dividends in 2024[6]. - The company repurchased common stock worth $82,293,000 in 2024, compared to $36,096,000 in 2023, showing a substantial increase in share buybacks[38]. Acquisitions and Integrations - The company completed the acquisition of Nubity on November 19, 2024, enhancing its cloud services offerings in Latin America[14]. - The company is focused on integrating Sinqia S.A. and achieving expected earnings accretion, while facing risks related to political and economic instability in its operating regions[27]. Outlook and Guidance - The 2025 outlook projects total consolidated revenue between $889 million and $899 million, representing approximately 5.1% to 6.3% growth compared to 2024[20]. - Adjusted earnings per common share for 2025 are expected to be between $3.34 and $3.45, reflecting growth of approximately 1.8% to 5.2% compared to $3.28 in 2024[20]. - 2024 revenue outlook is projected between $889 million and $899 million, with a low estimate of $845 million[50]. - GAAP Earnings per Share (EPS) guidance ranges from $1.93 to $2.05, with a low estimate of $1.73[50]. - Adjusted EPS (Non-GAAP) is expected to be between $3.34 and $3.45, with a low estimate of $3.28[50]. Assets and Liabilities - Total assets decreased to $1,857,611,000 in 2024 from $2,060,263,000 in 2023, a decline of 9.8%[32]. - Total liabilities decreased to $1,338,350,000 in 2024 from $1,424,887,000 in 2023, a reduction of 6.1%[34]. - The company’s total assets decreased by $29,075,000 in 2024, contrasting with an increase of $128,067,000 in 2023, indicating a shift in asset management strategy[38]. Cash Flow and Expenses - Total operating costs and expenses for 2024 were $679,820,000, compared to $558,549,000 in 2023, reflecting an increase of 21.6%[30]. - Cash flows from operating activities for 2024 were $260,059,000, an increase from $211,194,000 in 2023, indicating a rise of 23.1%[36]. - Net cash used in investing activities decreased significantly to $118,282,000 in 2024 from $507,932,000 in 2023, a reduction of 76.7%[38]. - EVERTEC's cash and cash equivalents decreased to $273,645,000 in 2024 from $295,600,000 in 2023, a decline of 7.4%[32]. - Cash and cash equivalents at the end of 2024 were $273,645,000, down from $295,600,000 at the end of 2023, a decrease of 7.4%[38]. Currency and Adjustments - The company experienced a foreign currency translation adjustment loss of $152,851,000 for the year ended December 31, 2024[30]. - Total adjustments to reconcile net income to net cash provided by operating activities amounted to $145,280,000 in 2024, compared to $131,318,000 in 2023, reflecting an increase of 10.6%[36]. - Total adjustments to reconcile GAAP EPS to Non-GAAP EPS amount to approximately $1.41 to $1.55 per share[50]. - Share-based compensation and other adjustments contribute $0.88 to the adjusted EPS calculation[50]. - Merger and acquisition related depreciation and amortization adds $0.58 to the adjusted EPS[50]. - Non-cash interest expense contributes $0.04 to the adjusted EPS[50]. - Anticipated tax effect of non-GAAP adjustments is estimated at approximately 6% to 7%[51]. - Shares used in computing adjusted earnings per common share are approximately 65.0 million to 65.1 million[50].

Core Insights - Evertec (EVTC) is expected to report quarterly earnings of $0.72 per share, reflecting a 16.1% increase year-over-year [1] - Analysts forecast revenues of $214.44 million, indicating a 10.2% year-over-year growth [1] - The consensus EPS estimate has remained unchanged over the last 30 days, suggesting stability in analyst projections [1] Revenue Estimates - 'Revenues- Payment Services - Puerto Rico & Caribbean' are estimated to be $55.31 million, representing a 5.5% increase from the previous year [4] - 'Revenues- Payment Services - Latin America' is projected to reach $78.04 million, indicating an 18.3% year-over-year growth [4] - 'Revenues- Merchant acquiring, net' is expected to be $44.52 million, suggesting a 10.7% increase year-over-year [5] - 'Revenues- Business solutions' is forecasted to reach $59.90 million, reflecting a 3.7% year-over-year growth [5] Market Performance - Over the past month, Evertec shares have recorded a return of +0.6%, contrasting with the Zacks S&P 500 composite's -1.8% change [5] - Based on its Zacks Rank 3 (Hold), EVTC is likely to perform in line with the overall market in the upcoming period [5]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Evertec (EVTC) as a strong candidate for value investors due to its favorable valuation metrics and earnings outlook [2][4][9]. Valuation Metrics - Evertec (EVTC) has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating it is a high-quality value stock [4]. - The current P/E ratio of EVTC is 10.98, significantly lower than the industry average of 26.18 [4]. - EVTC's PEG ratio stands at 1.27, compared to the industry's average PEG of 1.73, suggesting it is undervalued relative to its expected earnings growth [5]. - The P/B ratio for EVTC is 4.53, which is lower than the industry average of 9.07, indicating a solid valuation [6]. - The P/S ratio for EVTC is 2.77, slightly below the industry's average of 2.84, reinforcing its value proposition [7]. - The P/CF ratio for EVTC is 10.26, compared to the industry's average of 19.24, further suggesting that the stock is undervalued based on cash flow [8]. Investment Outlook - The combination of these valuation metrics indicates that Evertec (EVTC) is likely undervalued at present, making it an attractive option for value investors [9].