We came across a bullish thesis on EVERTEC, Inc. on CompanyCharts’s Substack. In this article, we will summarize the bulls’ thesis on EVTC. EVERTEC, Inc.'s share was trading at $29.25 as of January 29th. EVTC’s trailing P/E was 12.71 according to Yahoo Finance. Photo by rupixen.com on Unsplash EVERTEC, Inc. provides transaction processing and financial technology services in Latin America, Puerto Rico, and the Caribbean. EVTC currently trades at notably low valuation multiples compared with its peers, w ...

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Investors interested in stocks from the Financial Transaction Services sector have probably already heard of Evertec (EVTC) and MasterCard (MA) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores high ...

Core Insights - Investing in undervalued stocks with strong fundamentals is a strategy for long-term wealth creation, providing a margin of safety against market volatility while positioning for potential upside [2] - The focus on companies with robust fundamentals helps filter out those that are deteriorating, allowing investors to capitalize on stocks that can rebound from economic setbacks [3] OppFi (OPFI) - OppFi is enhancing its credit approval process through its proprietary AI and machine learning-based Model 6, which improved auto approval rates to 79.1% in Q3 2025 from 76.8% year-over-year [4] - The company experienced a 136.9% increase in net income, attributed to a 500 basis point reduction in total expenses as a percentage of revenues [4] - Management raised its adjusted net income guidance for 2025 to $137-$142 million from an earlier estimate of $95-$97 million, and adjusted EPS expectations increased to $1.54-$1.60 from $1.06-$1.07 [6] - OPFI is currently trading at a P/E ratio of 6.29X, significantly lower than the industry average of 20.73X, despite an 8% decline in stock price over the past three months [7] Green Dot (GDOT) - GDOT's B2B segment saw a revenue growth of over 30% in Q3 2025, driven by the Arc platform and strategic partnerships [12] - The company has a strong balance sheet with cash and equivalents of $1.6 billion and no current debt, resulting in a long-term debt to equity ratio of 7% compared to the industry average of 70.7% [14] - GDOT's revenue for 2025 is estimated at $2.1 billion, indicating a 20.4% year-over-year increase, with EPS expected to rise by 1.5% [17] Evertec (EVTC) - Evertec reported an 8% year-over-year revenue growth in Q3 2025, supported by expansions in Latin America and acquisitions [19] - The company has a strong liquidity position with cash and equivalents of $500 million and current debt of $24 million, resulting in a current ratio of 2.91 [20] - EVTC's revenue for 2025 is projected at $924 million, suggesting a 9.3% year-over-year gain, with EPS expected to rise by 9.5% [23]

Core Insights - The Federal Reserve has reduced the benchmark interest rate by 25 basis points to a range of 3.5-3.75%, marking a total reduction of 75 basis points in 2025 after a 1% cut in 2024, and will begin purchasing $40 billion in Treasury Bills [1] Group 1: Fintech Sector Performance - The fintech sector's performance is inversely related to interest rate movements, benefiting from a low-interest-rate environment which supports technological improvement and product innovation [2] - The expansion of mobile and broadband networks, along with advancements in AI and machine learning, positions fintech for significant growth, enhancing banking, payments, and investment solutions [3] Group 2: Recommended Fintech Stocks - Five mid-cap fintech stocks are recommended for investment: EVERTEC Inc. (EVTC), Enova International Inc. (ENVA), LendingClub Corp. (LC), OppFi Inc. (OPFI), and Bread Financial Holdings Inc. (BFH), all of which have favorable Zacks Ranks [4][9] - These stocks are expected to benefit from the Fed's rate cut, with improved earnings estimates for the upcoming year amid growing fintech demand [9] Group 3: Company-Specific Insights - **EVERTEC Inc. (EVTC)**: Engaged in transaction processing primarily in Latin America and the Caribbean, with expected revenue and earnings growth rates of 5.3% and 4% respectively for next year [7][10] - **Enova International Inc. (ENVA)**: Provides online financial services with expected revenue and earnings growth rates of 15.8% and 10.5% respectively for next year [11][12] - **LendingClub Corp. (LC)**: Offers an online marketplace for loans, with expected revenue and earnings growth rates of 13.2% and 35.7% respectively for next year [13] - **OppFi Inc. (OPFI)**: Provides a financial technology platform for consumer credit access, with expected revenue and earnings growth rates of 9.1% and 8.6% respectively for next year [14] - **Bread Financial Holdings Inc. (BFH)**: Focuses on personalized financial solutions, with expected revenue growth of 3.3% and a decline in earnings of -9.6% for next year [15][17]

Core Viewpoint - Evertec (EVTC) has received an upgrade to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements [4][6]. - Institutional investors often rely on earnings estimates to determine the fair value of a company's shares, leading to stock price movements based on their buying or selling activities [4]. Business Outlook - The increase in earnings estimates and the Zacks rating upgrade suggest an improvement in Evertec's underlying business, which could lead to higher stock prices as investors respond positively [5][10]. - For the fiscal year ending December 2025, Evertec is expected to earn $3.56 per share, with a 6.8% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7][9]. - Evertec's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Financial Performance - Total revenues for Q3 2025 reached $228,587,000, a 7.5% increase from $211,795,000 in Q3 2024[18] - Net income attributable to EVERTEC, Inc.'s common stockholders for Q3 2025 was $32,861,000, compared to $24,678,000 in Q3 2024, reflecting a 33.5% year-over-year growth[18] - Operating income for Q3 2025 was $37,732,000, down from $41,541,000 in Q3 2024, reflecting a decrease of 9.0%[18] - The company reported a total comprehensive income of $46,146,000 for Q3 2025, compared to $28,094,000 in Q3 2024, an increase of 64.3%[18] - Net income for the quarter ending September 30, 2025, was $32,700,000, compared to $40,404,000 for the previous quarter[20] - Net income for the nine months ended September 30, 2025, was $107,524,000, an increase of 45% compared to $74,112,000 in 2024[23] - Net income available to common shareholders for the nine months ended September 30, 2025, was $106.029 million, compared to $72.558 million for the same period in 2024, reflecting a growth of approximately 46%[96] Assets and Liabilities - Total assets increased to $2,149,167,000 as of September 30, 2025, up from $1,857,611,000 at the end of 2024, representing a 15.6% growth[17] - Current assets rose to $744,420,000, a significant increase from $529,065,000 at the end of 2024, marking a 40.7% increase[17] - Long-term debt increased to $1,059,143,000 from $925,062,000, indicating a 14.5% rise[17] - Total stockholders' equity grew to $663,750,000 as of September 30, 2025, compared to $472,524,000 at the end of 2024, a 40.4% increase[17] - As of September 30, 2025, total debt amounted to $1,095,751,000, an increase of 13.5% from $965,343,000 on December 31, 2024[47] Cash Flow and Dividends - Cash and cash equivalents increased to $474,738,000 from $273,645,000, a growth of 73.5%[17] - Cash dividends declared on common stock were $3,199,000 for the quarter ending September 30, 2025, consistent with the previous quarters[20] - The company paid $47,477,000 in interest for the nine months ended September 30, 2025, down from $55,024,000 in 2024[123] - The Company declared quarterly cash dividends of $0.05 per share on February 20, May 2, and July 24, 2025, totaling $0.15 per share for the year[97] Acquisitions and Investments - The company completed the acquisition of Grandata, Inc. for $33.3 million, enhancing its product offerings in data analytics[37] - The acquisition of Nubity, Inc. was finalized for $11.0 million, focusing on cloud services and infrastructure management[38] - On October 1, 2025, the company acquired 75% of Tecnobank for BRL$787 million (approximately USD$148 million), enhancing its product offerings[124][125] - The Company purchased the remaining interest of approximately 40% in Homie Do Brasil Informatica for $5.2 million, classified as a financing activity[66] Segment Performance - The Payment Services - Puerto Rico & Caribbean segment generated revenues of $36.7 million, while the Latin America Payments and Solutions segment contributed $83.4 million, indicating strong performance across these segments[110] - Segment Adjusted EBITDA for the total reportable segments was $98.0 million for the three months ended September 30, 2025, compared to $92.8 million for the same period in 2024, reflecting an increase of about 5.5%[110] - The Merchant Acquiring segment's revenues included discount fees and membership fees charged to merchants, contributing significantly to the overall revenue growth[105] - The Business Solutions segment reported revenues driven by a full suite of business process management solutions, with a focus on core bank processing and managed services[106] - The Latin America Payments and Solutions segment's revenues are primarily driven by transaction processing, highlighting the importance of transaction volume in revenue generation[104] Expenses and Costs - The company experienced a decrease in depreciation and amortization expenses to $28,435,000 in Q3 2025 from $33,660,000 in Q3 2024, a reduction of 15.6%[18] - The company reported a decrease in depreciation and amortization expenses to $85,217,000 from $101,051,000, a reduction of approximately 16%[23] - Amortization expense for other intangibles for the nine months ended September 30, 2025 was $68.7 million, down from $84.2 million for the same period in 2024, indicating a decrease of 18.4%[45] Tax and Regulatory - As of September 30, 2025, the gross deferred tax asset was $98.4 million, while the gross deferred tax liability was $87.2 million, compared to $74.3 million and $79.9 million, respectively, as of December 31, 2024[93] - The current tax provision for the nine months ended September 30, 2025, was $27.119 million, an increase from $23.375 million in 2024[91] Other Financial Metrics - The balance of accumulated other comprehensive loss improved from $(134,723) at December 31, 2024, to $(48,374) at September 30, 2025[68] - The estimated aggregate amount of the transaction price allocated to unsatisfied or partially satisfied performance obligations was $724.8 million, expected to be recognized over the next 5 to 7 years[85] - The allowance for expected current credit losses on trade receivables was $2.619 million as of September 30, 2025, down from $2.856 million at the end of 2024[88] - A hypothetical 100 basis point increase in interest rates would increase annual interest expense by approximately $5.5 million based on outstanding debt as of September 30, 2025[209] - The company has three interest rate swap agreements to convert a portion of variable rate debt to fixed[210]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $228.6 million, an 8% increase year-over-year, with constant currency revenue also growing by 8% [8][13] - Adjusted EBITDA increased to $92.6 million, up approximately 6% year-over-year, with an adjusted EBITDA margin of 40.5% [8][15] - Adjusted EPS was $0.92, reflecting a 7% increase year-over-year, driven by strong adjusted EBITDA growth and lower interest expense [8][15] - Operating cash flow for the first nine months of the year was approximately $157 million, with liquidity at approximately $518.6 million as of September 30 [8][21] Business Line Data and Key Metrics Changes - Merchant acquiring revenue grew 3% year-over-year to $46.8 million, driven by higher sales volume [9][16] - Payment services in Puerto Rico grew 5% year-over-year to $55.2 million, primarily due to strong performance in ATH Móvil [9][17] - Latin America payments and solutions revenue increased 19% year-over-year to $90.4 million, with double-digit organic growth [10][18] - Business solutions revenue increased approximately 1% to $61.7 million, primarily due to projects completed during the quarter [19] Market Data and Key Metrics Changes - Economic conditions in Puerto Rico remained favorable, with an unemployment rate steady at 5.6% and strong consumer spending [9] - Latin America saw a robust pipeline and significant wins, including contracts with Banco de Chile and Financiaria O in Peru [10][11] Company Strategy and Development Direction - The company is focused on expanding its presence in Brazil through acquisitions, such as TechnoBank, which enhances its financial technology capabilities [11][12] - Continued investment in dynamic markets is a cornerstone of the company's strategy, aiming for diversification and growth [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, particularly in Latin America, and highlighted the successful integration of recent acquisitions [10][33] - The company anticipates strong top-line growth in 2026, supported by strategic priorities and cost initiatives [29] Other Important Information - A cybersecurity incident was reported, but it was contained and did not impact other products or services [5][6] - The company has a strong cash position, with net debt at $631.8 million and a weighted average interest rate of approximately 6.24% [21] Q&A Session Summary Question: Insights on LatAm growth and market resonance - Management noted durable growth in LatAm, with successful product scaling and significant deals like Banco de Chile [31][32] Question: Contribution from cost of living adjustments - CPI adjustments were discussed, with current caps and future expectations outlined [34][37] Question: Impact of government shutdown on Puerto Rican economy - No direct impact observed yet, but monitoring is ongoing due to reliance on federal funds [42] Question: Status of the cybersecurity incident and business momentum - No adverse impact on business momentum was reported, with systems now hardened [47][48] Question: Margin performance and expectations - Margins were in line with expectations, with a noted decline due to transaction volume dynamics [49][50] Question: Capital allocation and M&A appetite - The company is evaluating capital allocation, including potential share buybacks and M&A opportunities [52][56]

Core Insights - EVERTEC reported Q3 CY2025 results that exceeded market revenue expectations, with a year-on-year sales increase of 7.9% to $228.6 million, surpassing analyst estimates by 2% [1][6] - The company's full-year revenue guidance is set at $924 million, which is 2.1% above analysts' estimates [1] - Non-GAAP profit for the quarter was $0.92 per share, exceeding analysts' consensus estimates by 3.5% [1] Financial Performance - Q3 CY2025 revenue was $228.6 million compared to analyst estimates of $224.1 million, reflecting a 7.9% year-on-year growth [2] - Pre-tax profit for the quarter was $33.43 million, resulting in a 14.6% margin [2] - Adjusted EPS for the quarter was $0.92, beating analyst estimates of $0.89 by 3.5% [2] - Full-year adjusted EPS guidance is $3.59 at the midpoint, which is 3% above analyst estimates [2] - The company's market capitalization stands at $1.83 billion [2] Growth Trends - Over the last five years, EVERTEC has achieved a compounded annual growth rate of 12.4% in revenue, indicating strong long-term sales performance [3] - The annualized revenue growth over the last two years is 16.8%, which is above the five-year trend, suggesting recent demand acceleration [4]

Third Quarter Earnings Conference Call November 6, 2025 Foward Looking Statements Certain statements in this presentation 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 Act of 1934 ...