FLT Flight Safety Technologies,

On Mar 25, 2013, shares of FleetCor Technologies (FLT) hit a 52-week high of $76.88. The company reported fourth-quarter results with a positive earnings surprise of 10%. FleetCor delivered positive earnings surprise in 3 out of 4 quarters in 2012 with an average beat of 10%.

On Feb 7, 2013, FleetCor reported its fourth-quarter adjusted earnings of 77 cents which breezed past the Zacks Consensus Estimate by 10% and year ago earnings by 51%.

FleetCor’s top line grew 45% year over year to $203 million, driven by solid contribution from international and North America segment as well as increase in merchant commissions. It surpassed the Zacks Consensus Estimate of $179 million.

FleetCor has been continuously working toward developing its businesses globally. Earlier this month FleetCor entered into an agreement to buy the Telenav enterprise business unit from Telenav Inc. (TNAV). Previously, in 2012 FleetCor successfully acquired CTF technologies Inc. (CTF) – a Brazilian fuel payment processor. Other notable acquisitions include a Fuel card company in Russia and the Mexican assets of Tebca and Servitebica – the subsidiaries of NovoPayment, a prepaid card program provider. Additionally, the company also commenced its Global FleetNet (GFN) platform in Asia for Shell in 2012. With $1 billion liquidity to support such transactions the company expects to engage in more business development activities, going forward.

Further the company has been gaining investor confidence by engaging in considerable share buybacks. In Dec 2012, the company repurchased nearly 3.85 million stocks under a share repurchase agreement with its shareholders associated with Summit Partners and Bain Capital.

However, valuation looks stretched for FleetCor. The shares are trading at a 55.1% premium to the peer group average on a forward price-to-earnings basis and at a 199.1% premium to the peer group average on a price-to-book basis. The return on equity is 24.9% above the peer group average. Nevertheless, the 1-year return from the stock is 91.46%, much above the S&P 500’s return of 11.06%.   

We believe FleetCor’s focus on business development to bolster future earnings. FleetCor expects to deliver $3.61 to $3.69 per share in earnings on revenue of $790–$810 million in 2013. The acquisitions and share buybacks are expected to help FleetCor achieve its expectation and improve its operational results going forward. The overall long-term expected earnings growth rate for this stock is 16.4%.

FleetCor currently carries a Zacks Rank #2 (Buy). Among others from the industry, Moody’s Corporation (MCO) and Euronet Worldwide Inc. (EEFT) carry a favorable Zacks Rank #1 (Strong Buy) and are worth noting.

 
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