The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, incl ...

Core Viewpoint - Priority Technology Holdings, Inc. (PRTH) has experienced a significant stock decline of 31.8% over the past three months, contrasting with a 4.6% decline in the industry and a 4.9% fall in the Zacks S&P 500 composite [1][4] Group 1: Stock Performance - Over the past year, PRTH's stock has surged by 150%, indicating it is currently in a correction phase [4] - The stock's recent correction may present an appealing opportunity for investors [4] Group 2: Market Position and Growth Potential - The global mobile payment market is projected to reach $88.5 billion in 2024, with a compound annual growth rate (CAGR) of 38% from 2025 to 2030, positioning PRTH to benefit from this growth [5] - In Q4 2024, PRTH reported a 13.9% year-over-year increase in revenue, with merchant bankcard processing dollar value and B2B issuing dollar volume rising by 6.6% and 13.5%, respectively [6] - The enterprise payments segment saw a 37% year-over-year growth in average billed clients, with average monthly new enrollments increasing by 7.8% [7] - PRTH's ability to provide seamless transactions is expected to enhance customer acquisition and market share in the expanding mobile payment market [8] Group 3: Valuation Metrics - PRTH shares are currently priced at 10.3 times forward 12-month earnings per share, significantly lower than the industry average of 32.7 times [9] - The trailing 12-month EV-to-EBITDA ratio for PRTH is 6.7 times, well below the industry's average of 22.8 times [12] Group 4: Financial Outlook - The Zacks Consensus Estimate for PRTH's 2025 revenues is $985.5 million, indicating a 12% growth from the previous year, with a similar growth forecast for 2026 [14] - Earnings per share for 2025 are estimated at 69 cents, reflecting a year-over-year growth of 35.3%, with a projected 58% increase for 2026 [14] Group 5: Competitive Landscape - PRTH faces intense competition in the payments industry, particularly from larger players like Payoneer Global Inc. and Corpay, Inc., which may impact its market share [15] - Competitors possess more resources and brand value, potentially leading to pricing pressures and challenges in customer retention and acquisition [16] Group 6: Risks to Growth - The termination of referral partner agreements or industry consolidation could adversely affect PRTH's growth trajectory [17] - A lack of innovation may hinder PRTH's ability to achieve top-line growth, negatively impacting stock performance [17] Group 7: Investment Considerations - The expanding mobile payment market and PRTH's discounted stock price make it an attractive option for investors [18] - A strong liquidity position supports PRTH's financial stability, with a current ratio of 1.05, although it is lower than the industry's 1.65 [11] - Caution is advised as PRTH is currently in a correction phase, suggesting that investors should monitor share price adjustments before making investment decisions [19]

Priority Technology Holdings (NASDAQ: PRTH ) is positioned to profit from the highly competitive market of integrated payment solutions, especially in small and medium-sized businesses (SMB) and B2B markets. I know at least ten companies from differentI am a finance and investment enthusiast with a strong focus on fundamental analysis, valuation, and long-term growth potential, particularly in the AI, fintech, and tech sectors. My background includes academic studies in finance and economics, along with exp ...

Financial Data and Key Metrics Changes - The company reported the strongest revenue performance in its history for both Q4 and the full year, with net revenue growing by 16% and adjusted EBITDA increasing by 21% for the full year 2024 [7][10] - Q4 revenue reached $227.1 million, a 14% increase from the prior year, leading to a 15% increase in adjusted gross profit to $83.9 million and a 16% improvement in adjusted EBITDA to $51.7 million [9][10] - For the full year 2024, total revenue was $879.7 million, with adjusted gross profit increasing to $328.1 million and adjusted EBITDA reaching $204.3 million [10][30] Business Segment Data and Key Metrics Changes - The SMB segment generated Q4 revenue of $155.7 million, an 11.1% increase year-over-year, with adjusted gross profit of $32 million, up 0.4% from the previous year [18][20] - The B2B segment reported revenue of $23.7 million, a 10.9% increase, with adjusted gross profit rising to $6.4 million, reflecting a 24% growth [22][23] - The Enterprise segment saw Q4 revenue of $48.7 million, a 27% increase, with adjusted gross profit also increasing by 27% to $45.6 million [24][25] Market Data and Key Metrics Changes - The company processed over $130 billion in annual transaction volume during the prior 12 months, with approximately 1.2 million total customer accounts on its commerce platform [7][10] - Bank card dollar volume in the SMB segment was $15.5 billion for the quarter, up 6.6% from the prior year [18][19] Company Strategy and Development Direction - The company aims to sustain momentum in its acquiring, payables, and Enterprise segments, with a revenue growth forecast of 10% to 14% for 2025 [8][36] - The focus remains on refining customer experiences and innovating SaaS payments and banking solutions to meet evolving customer needs [12][41] - The company is positioned as a consolidator in the payments and financial technology space, targeting opportunities in sectors with legacy technology and inefficient operations [41][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth despite potential headwinds from lower interest rates and a challenging macroeconomic environment [8][36] - The company noted that over 63% of adjusted gross profit in Q4 came from recurring revenues, indicating a shift towards a more stable revenue model [17][18] - Management highlighted the importance of maintaining a disciplined approach to capital allocation, balancing debt paydown with potential M&A opportunities [50][58] Other Important Information - The company redeemed its preferred stock during the quarter, which resulted in a fourth-quarter preferred dividend of only $2.65 million [31][35] - A material weakness in internal controls over financial reporting was disclosed, but it did not result in a restatement of financial results [33][35] Q&A Session Summary Question: Capital allocation strategy between debt paydown and increased CapEx or SG&A - Management emphasized the importance of balancing debt paydown with M&A opportunities, while also considering the shift from CapEx to OpEx as platforms migrate to the cloud [50][52] Question: Impact of recent rate cut forecasts on guidance - Management confirmed that they have factored in the expected rate cuts into their 2025 guidance, adopting a conservative approach [54][56] Question: Impact of tariffs on businesses served - Management noted that while tariffs may create inflation, they have not seen significant negative impacts on the acquiring side, and demand for B2B solutions is increasing [67][68] Question: Reasons for declining gross margin percentage in consumer payments - Management explained that the decline is partly due to residual purchases running off and a one-time inventory write-off of $3.5 million, but core margins have actually expanded [71][78] Question: Magnitude of CapEx to OpEx shift - Management estimated a $4 million impact from the CapEx to OpEx shift for 2025, which will affect underlying profitability [110] Question: Guidance on adjusted EPS expectations - Management indicated that adjusted EPS for 2025 could approach $1 per share based on normal growth trends [120]

Revenue Growth - Consolidated revenue for the year ended December 31, 2024, was $879.7 million, an increase of $124.1 million or 16.4% from $755.6 million in 2023[174] - Merchant card fees revenue increased by $75.2 million or 12.6% to $670.4 million in 2024, driven by the acquisition of Plastiq and increased transaction counts[176] - Money transmission services revenue rose by $32.0 million or 32.6% to $130.1 million in 2024, primarily due to an increase in customer enrollments[177] - Outsourced services and other services revenue increased by $17.4 million or 35.1% to $67.0 million in 2024, attributed to higher interest income and additional revenues from the B2B Payments segment[178] - B2B Payments segment revenue increased to $89.1 million for the year ended December 31, 2024, up 116.5% from $41.2 million in 2023, driven by the acquisition of Plastiq and increased interest revenue[199] - Enterprise Payments segment revenue reached $180.4 million in 2024, a 36.6% increase from $132.2 million in 2023, attributed to higher customer enrollments and growth in interest income[202] Operating Expenses - Total operating expenses for 2024 were $746.3 million, an increase of $72.2 million or 10.7% from $674.1 million in 2023[180] - Adjusted EBITDA from the SMB Payments segment was $108.9 million in 2024, a slight decrease of $0.6 million or 0.6% from $109.5 million in 2023[197] - Adjusted EBITDA for the B2B Payments segment rose to $7.6 million in 2024, a 245.5% increase from $2.2 million in 2023, primarily due to higher revenues despite increased operating expenses[200] - Adjusted EBITDA for the Enterprise Payments segment was $154.9 million in 2024, reflecting a 39.8% increase from $110.9 million in 2023, driven by revenue growth offset by increased salaries[203] Net Income and Financial Performance - Net income for 2024 was $24.0 million, a significant increase of $25.3 million from a net loss of $1.3 million in 2023[190] - Operating income improved to $133,421 in 2024, up 63.7% from $81,524 in 2023[258] - The company reported a basic and diluted loss per common share of $0.31 for 2024, improving from a loss of $0.63 in 2023[258] - The total shareholders' deficit attributable to shareholders increased to $(166,840) in 2024 from $(147,718) in 2023[256] Cash Flow and Working Capital - Working capital improved to $53.4 million at December 31, 2024, compared to $29.2 million at the end of 2023, with cash and cash equivalents increasing to $58.6 million from $39.6 million[207] - Net cash provided by operating activities was $85.6 million in 2024, a 5.3% increase from $81.3 million in 2023, driven by net income growth[211] - Net cash used in investing activities decreased to $35.5 million in 2024 from $55.7 million in 2023, with no business acquisitions in 2024 compared to $28.2 million spent on acquiring Plastiq in 2023[212] - Total cash and cash equivalents, and restricted cash at the end of 2024 reached $993,864 thousand, up from $796,223 thousand in 2023[268] Debt and Financing - Long-term debt obligations increased to $945.5 million in 2024 from $654.4 million in 2023, marking a $291.1 million rise[215] - The company entered into a $835.0 million term facility and a $70.0 million revolving credit facility under the 2024 Credit Agreement, with the term facility maturing in May 2031[216] - As of December 31, 2024, the company had $945.5 million in outstanding borrowings under its Credit Agreement, with a potential cash interest expense fluctuation of approximately $9.5 million per year for a hypothetical 1.00% change in the SOFR rate[228][229] Tax and Valuation - The effective tax rate decreased to 35.6% in 2024 from 118.3% in 2023, primarily due to a reduction in valuation allowance against deferred tax assets[188] - The company recognized interest and penalties associated with uncertain tax positions as a component of income tax expense[351] Internal Controls and Compliance - The company has identified a material weakness in internal control over financial reporting related to automated controls for data transformation from third-party processors, affecting revenue and expense determinations[246] - The company’s internal control over financial reporting was found to be ineffective as of December 31, 2024, due to identified deficiencies[245] Asset Management - Total current assets increased to $1,105,085 in 2024, up 25.5% from $881,294 in 2023[256] - Total liabilities rose to $1,991,885 in 2024, an increase of 32.5% from $1,502,796 in 2023[256] - The company’s total assets grew to $1,826,860 in 2024, up 13.1% from $1,615,337 in 2023[256] Business Operations and Strategy - The company aims to enhance its payment solutions through its proprietary Priority Commerce Engine, focusing on optimizing cash flow and working capital for customers[270] - The Company’s B2B Payments segment enables customers to automate accounts payable and other commercial payments functions[284] Acquisitions and Goodwill - The acquisition of Plastiq was completed on July 31, 2023, for a total purchase consideration of approximately $37.0 million, including $28.5 million in cash[366][367] - The fair value of the acquired intangible assets includes $13.0 million for customer relationships, $7.0 million for referral partner relationships, $6.5 million for technology, and $3.9 million for trade name[369] - The company tests goodwill and indefinite-lived intangibles for impairment annually, concluding no impairment for the years ended December 31, 2024, 2023, and 2022[316]

Revenue Growth and Financial Performance - Priority's revenue CAGR from 2021 to 2023 was ~21%, with Adjusted Gross Profit CAGR at ~33% and Adjusted EBITDA CAGR at ~32%[9] - Q3 2024 consolidated revenue increased 17% to $652.6 million, with adjusted gross profit up 21% to $244.1 million and adjusted EBITDA growing 23% to $152.5 million[25] - Revenue for Q4 2024 is expected to be between $225.2M and $227.2M[50][51] - Revenue growth for 2025 is forecasted to be in the range of 10.0% to 14.0%[54] - Total Revenue for Q3 2024 was $227.0 million, with Recurring and Re-Occurring revenue contributing 97% of the total[60] Segment Performance - Q3 2024 revenue breakdown: SMB segment generated $158.8M with a 22.4% Adj. Gross Profit margin, B2B segment generated $22.1M with a 28.5% margin, and Enterprise segment generated $47.1M with a 93.6% margin[11] - SMB segment revenue grew 13% YoY in Q3 2024, with adjusted gross profit margin at 22.4%[23][29] - B2B segment revenue surged 58% YoY in Q3 2024, with adjusted gross profit margin reaching 28.5%[23][31] - Enterprise segment revenue increased 34% YoY in Q3 2024, with adjusted gross profit margin at 93.6%[23][35] - B2B segment added 28,000 suppliers in 2024 and now has 90,000 buyers on its platform as of Q3 2024[31] - Enterprise segment account balances reached $1.1 billion in Q3 2024, with 100% nationwide MTL coverage[33] Recurring Revenue and Profitability - ~60% of Q3 2024 Adjusted Gross Profit came from recurring revenue, with ~97% of Q3 2024 revenue being recurring or re-occurring[9] - Recurring revenue for Q3 2024 was $66.9 million, accounting for 29% of total revenue, while Re-Occurring revenue was $153.7 million, making up 68% of total revenue[60] - Adjusted Gross Profit from Recurring revenue in Q3 2024 was $51.3 million, representing 60% of total Adjusted Gross Profit[60] - Priority's Free Cash Flow Conversion was ~89% YTD 2024, driven by a highly visible revenue model with largely recurring or re-occurring revenue[9] - Free Cash Flow for YTD September 2024 was $135.5 million, with a Free Cash Flow Conversion rate of 88.8%, up from 87.7% in the same period last year[61] Adjusted EBITDA and Margins - Priority's Adjusted EBITDA margin is estimated to expand by 456 basis points since 2021, reaching 23.3% in 2024E[21] - Adjusted EBITDA for Q3 2024 increased to $54.6 million, up from $45.0 million in Q3 2023, with an Adjusted EBITDA Margin of 24.1% compared to 23.8% in the same period last year[59] - Adjusted EBITDA for YTD September 2024 was $152.5 million, up from $123.7 million in the same period last year, with an Adjusted EBITDA Margin of 23.4% compared to 22.2%[61] - Adjusted Gross Profit for Q4 2024 is projected to range from $82.7M to $86.5M[50][51] - Adjusted EBITDA for Q4 2024 is estimated to be between $49.7M and $54.1M[50][51] - Adjusted Gross Profit margin for 2025 is expected to be between 37.5% and 39.0%[54] - Adjusted EBITDA margin for 2025 is anticipated to range from 22.5% to 24.0%[54] Market Position and Opportunities - The company has a $25 trillion addressable market in North America for accounts payable/receivable flows and a $112B embedded finance market, with only ~17% captured[12] - The U.S. consumer card payment volume is expected to grow by $4 trillion from 2022A to 2027E[15] - Priority is the 6th largest U.S. non-bank merchant acquirer, with $127B in LTM Q3 2024 volume and 1.1M merchants[19] Acquisitions and Strategic Moves - The company completed the acquisition of Plastiq in Q3 2023 and continues to pursue strategic acquisitions in vertical markets and geographic expansion[31][46] - The company acquired RentPayment from Yapstone, Inc for $71M in 2019, leading to a 25% revenue growth and 65% increase in Adj. EBITDA[47] - Finxera was acquired for $407M net of cash in 2021, leveraging its technology platform for Banking & Treasury Solutions[47] - Plastiq assets were acquired out of bankruptcy for $37.3M in 2023, achieving Adj. EBITDA positivity within 2 quarters[47] Financial Metrics and Ratios - Priority's LTM Q3 2024 volume was $46.4B, with $1.1B in account balances and $70.3B in total card dollar volume[11] - YTD Q3 2024 free cash flow grew 25% to $147.1 million, with free cash flow conversion at 89.9%[38] - CapEx spend for YTD Q3 2024 was $21.3 million, representing 2.8% of revenue[40] - Net leverage ratio decreased to 4.0x as of Q3 2024, down from 8.8x in 2021[43] - Capex for YTD September 2024 was $17.0 million, slightly higher than the $15.3 million in the same period last year[61] - Interest Expense for YTD September 2024 increased to $65.8 million, compared to $55.5 million in the same period last year[61] - Depreciation and Amortization for YTD September 2024 decreased to $44.2 million, down from $53.3 million in the same period last year[61] - Income Before Taxes for Q3 2024 was $15.5 million, with a margin of 6.8%, compared to $4.2 million and a margin of 2.2% in Q3 2023[59] Ownership and Market Cap - The company has a 75.0% insider ownership and a market cap of $739M as of January 14, 2025[6] Adjusted Gross Profit and EBITDA Details - Adjusted Gross Profit for the nine months ended September 30, 2024, was $244.1M, with a margin of 37.4%[58]

Core Viewpoint - Priority Technology Holdings, Inc. (PRTH) is expected to report its fourth-quarter 2024 results on March 6, with a consensus estimate for revenues at $226.2 million, indicating a 13.5% year-over-year growth driven by strong reseller relationships [1][3]. Revenue Expectations - The Zacks Consensus Estimate for PRTH's fourth-quarter revenues is $226.2 million, reflecting a 13.5% increase compared to the previous year [3]. - The anticipated revenue growth is attributed to the company's effective acquisition and retention of high-quality resellers focused on growth [3]. Earnings Projections - The consensus estimate for earnings is 6 cents per share, a significant improvement from a loss of 16 cents in the same quarter last year [5]. - Focus on expense discipline and strong margins is expected to positively impact the bottom line [5]. Market Trends and Strategies - Merchant bankcard processing dollar value and B2B issuing dollar volume are projected to have improved due to PRTH's ability to leverage market trends effectively [4]. - The company's innovative strategies are likely to have supported growth in average billed clients and average monthly new enrollments [4]. Earnings Prediction Model - The current model does not predict a definitive earnings beat for PRTH, with an Earnings ESP of 0.00% and a Zacks Rank of 2 (Buy) [6][7].

Priority Technology Holdings, Inc. (PRTH) stock has shown remarkable growth over the past year. The stock has gained 227.3%, outperforming the industry's 53.6% rally and the Zacks S&P 500 composite's 18.5% growth.One Year Price PerformanceImage Source: Zacks Investment ResearchPRTH has performed better than its industry peers, such as Byrna Technologies Inc. (BYRN) and Cellebrite (CLBT) . BYRN has gained 129.8% and CLBT has returned 59.1% over the same period.In the last trading session, the PRTH stock clos ...

Core Viewpoint - Priority Technology (PRTH) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with stock price movements, particularly due to institutional investors' reliance on these estimates for valuation [4][6]. - Priority Technology is projected to earn -$0.20 per share for the fiscal year ending December 2024, reflecting a year-over-year change of 68.3% [8]. - Over the past three months, the Zacks Consensus Estimate for Priority Technology has increased by 49%, indicating a positive trend in earnings expectations [8]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, highlighting the superior earnings estimate revision feature of these stocks [9][10].

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," contrasting with traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investing can be risky as stocks may lose momentum when their valuations exceed future growth potential [1] - Identifying the right entry point for fast-moving stocks is challenging, and investors may end up with expensive shares that have limited upside [1] Group 2: Bargain Stocks with Momentum - Investing in bargain stocks that have recently shown price momentum may be a safer strategy [2] - The Zacks Momentum Style Score is useful for identifying strong momentum stocks, while the 'Fast-Paced Momentum at a Bargain' screen helps find attractively priced fast-moving stocks [2] Group 3: Priority Technology (PRTH) Analysis - Priority Technology (PRTH) has shown a price increase of 3.5% over the past four weeks, indicating growing investor interest [3] - PRTH gained 23.8% over the past 12 weeks, demonstrating its ability to deliver positive returns over a longer timeframe [4] - The stock has a beta of 1.2, suggesting it moves 20% higher than the market in either direction [4] Group 4: Valuation and Earnings Estimates - PRTH has a Momentum Score of A, indicating a favorable time to invest [5] - The stock has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which attract more investors [6] - PRTH is trading at a Price-to-Sales ratio of 0.78, meaning investors pay 78 cents for each dollar of sales, indicating a reasonable valuation [6] Group 5: Additional Investment Opportunities - PRTH has potential for further growth at a fast pace, and there are other stocks that meet the 'Fast-Paced Momentum at a Bargain' criteria [7]