ACIW was recommended by Stock Pickers Digest at $19.05 in Investment Digest issue 678, dated September 1, 2010.
“ACI Worldwide, Inc. (ACIW) makes software that is used to process transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments.
“In mid-February 2012, ACI completed its purchase of S1 Corp. for $540 million in cash and stock. This acquisition is a good fit: S1 sells transaction software for banks, credit unions, retailers and other payment processors. It has over 3,000 clients worldwide.
“In the first quarter of 2012, ACI’s revenue rose 31.6%, to $137.6 million from $104.5 million a year earlier. The gain was largely due to S1’s $22.5-million contribution. Without acquisition-related costs, earnings per share rose sharply, to $0.28 from $0.05. ACI holds cash of $201.1 million, or $5.05 a share. Its long-term debt of $352.5 million is a low 22.0% of its market cap.
“The company spends a high 22% of its revenue on research. That will let it keep offering the most advanced transaction-processing software. This includes switching from cash and cheques to credit and debit cards, as well as mobile payments with smartphones.
“The stock trades at a high 31.8 times ACI’s forecast 2012 earnings of $1.26 a share. However, its earnings are forecast to rise to $1.92 a share next year. ACI trades at 20.8 times that estimate. That’s reasonable in light of the company’s strong growth prospects. ACI Worldwide is still a buy.”
- Patrick McKeough, Stock Pickers Digest, June