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Paysafe enters value territory

The payment processing specialist enjoyed an impressive 2016, although underwhelming revenue guidance weighed on sentiment
March 7, 2017

Disparaging comments from Spotlight Research ahead of the introduction of potentially game-changing new European anti-money legislation has weighed on sentiment at Paysafe (PAYS) of late. The group's management team reckons it's well prepared for regulatory changes aimed at eliminating anonymous payments, although its guidance for low double-digit organic revenue growth in 2017 only served to heighten investor concerns.

IC TIP: Buy at 411p

This underwhelming outlook took some of the shine off an impressive 21 per cent increase in total payment volumes in 2016. Admittedly, a significant amount of the $48bn (£39m) it handled through its processing, digital wallet and prepaid vouchers was generated by Skrill, the rival US group it acquired in August 2015. Skrill's introduction also explains the sharp changes to statutory figures (see table).

Encouragingly, Paysafe's other businesses put in similarly good shifts. Organic revenues rose 21 per cent at constant currencies, reflecting growing usage from both existing and new merchants. Key to this success was the expansion of the group's distribution networks, technology enabling customers to expand into new territories and take advantage of different payment options, and vibrant activity during the 2016 Uefa European Championship.

Analysts at UBS forecast adjusted EPS of 51¢ in 2017, up from 43¢ in 2016.

PAYSAFE (PAYS)
ORD PRICE:411pMARKET VALUE:£1.99bn
TOUCH:411-412p12-MONTH HIGH:474pLOW: 229p
DIVIDEND YIELD:NILPE RATIO:17
NET ASSET VALUE:252¢*NET DEBT:23%

Year to 31 DecTurnover ($bn)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
20120.183.61.0nil
20130.2532.722.0nil
20140.3759.021.0nil
20150.6111.82.0nil
20161.0016829.0nil
% change+63+1,323+1,350-

Ex-div:

Payment:

*Includes intangible assets of $1.5bn, or 314¢ a share £1=$1.22