Financial stock Shift4 Payments is forming a cup base and recovering after it sold off following the latest earnings report. The payment processor is the IBD 50 Stocks To Watch pick for today.
Shift4 Payments is a global digital payments processor with users in food and beverage, travel and hospitality, entertainment, retail and other industries.
The company accepts over 160 currencies and supports cryptocurrency.
The fintech company announced Wednesday it entered into a partnership with casino gaming technology company Light & Wonder. The collaboration allows customers point-of-play debit access to funds without leaving the gaming table or handling cash.
"We are quickly growing our presence in the gaming space with our ability to deliver both card-present and card-not-present solutions, and this agreement further enhances our capabilities for our casino customers," said Anthony Perez, Shift4's senior vice president.
Shift4 announced on May 24 a partnership with online restaurant reservation company OpenTable. The arrangement allow restaurants a way to track customer booking and spending data.
The company holds the No. 1 spot out of 40 stocks in the credit card and payment processing industry group. The group is ranked 77th out of 197 IBD industries.
FOUR had its initial public offering on June 5, 2020. According to IBD founder William O'Neil's "How to Make Money in Stocks," most big stock winners had an IPO in the prior one to eight or 10 years.
Financial Stock Forming A Cup
FOUR is forming a cup base with a 76.40 buy point. The stock reclaimed the 50-day moving average on Tuesday. Before then, the stock had spent most of its basing period below the line.
Shares sold off 10.7% in heavy volume on May 4, despite higher-than-expected first quarter earnings and sales. The financial stock has been clawing its way off the bottom of its base since the earnings-related plunge.
Shares dropped below the 50-day line as it plummeted 8.7% in very heavy volume on April 19, following a Blue Orca report claiming the company engaged in "highly questionable and hyperaggressive accounting maneuvers" in 2022.
Blue Orca claimed founder Jared Isaacman was a net seller of shares in 2022. Isaacman responded in an April 20 letter addressing the claim, "I only purchased shares in 2022 and never sold stock on the market as it was implied."
The financial stock is still about 12% off its 52-week high of 76.40, and about 35% off its all-time high of 104.11 from April 9, 2021.
Earnings Grew An Impressive 240%
Shift4 posted 240% Q1 earnings growth on top of 488% and 69% increases the previous two quarters. Quarterly sales growth has tapered off from 2022's pace, but still showed a 36% increase. Sales growth ranged from 35% to 68% the previous four quarters.
Management expects 2023 gross revenue of $2.55 billion to $2.7 billion. Its 2022 gross revenue was $1.99 billion. FOUR has a 50% three-year sales growth rate, according to IBD Stock Checkup.
Analysts expect 65% profit growth this year and 29% next year, which would be outstanding gains.
Mutual funds own 73% of shares, with 504 owning it in March, up from 431 in December and 384 in September.
Lord Abbett Developing Growth fund and Allspring Growth — both in the IBD Mutual Fund Index — bought shares of the financial stock in the first quarter.
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