B2B Payments

Has FleetCor Lived Up To Its 2014 Great Expectations?  

FleetCor has tickled investors in 2014, with its large and expanding hold in the  business of fleet cards, and, with the completion acquisition of Canadian company  Comdata, B2B e-payments in general.  Wall Street Growth investor Louis Navellier  has chosen FleetCor as his pick for the Investor Place’s 10 Best Stocks of 2014, a pick that stands out on a list that that includes some rather better known names like Tesla Motors, Santander Bank and CitiGroup.

Then again, Fleet has gone more mainstream, at least among those interested in watching value investing this year. Recently PYMNTS reported on Jim Cramer’s new found enthusiasm for Fleet Cards.

“They charge vehicle fleet operators a subscription as well as transaction fees and they also get a piece of the transaction revenue from the gas station partners whenever anyone uses one of their cards to pay for fuel. That is a terrific business model.”

It is also an underserved area—fleet transaction are valued at over a trillion dollars annually and yet FleetCor—the largest business in the sector, has around 3 percent of the market.

And it is in that room to grown and take on more of the trillion dollar pie is what has stoked in the interest of professional invementment guru’s like Navellier  and Cramer.

“In the past decade, FleetCor has made more than 60 acquisitions that have helped grow its payments business in the U.S. and around the world. FleetCor has said that it plans to focus more of its energy on emerging markets and repeat the process that’s working in U.S. and Europe. Right now 49% of the business is outside the U.S., and FleetCor thinks that will growing as it has seen tremendous opportunities for the fuel card and payments business around the world,” Navellier wrote in defending his pick for a spot in the top ten.

FleetCor has not had some difficulties in 2014 that could still derail some of the recent enthusiasm around it.  The stock has risen a little under 14 percent, which is weaker result that was forecasted earlier in the year.

Two situations have exacerbated that. One was literally an act of God—the unusually bad 2014 winter in the U.S., where FleetCor does the vast majority of its business, slowed down corporate travel, which took a toll on the company’s bottom line.  Second, the increasing tensions in Russia, escalating around the proposed sanctions in nations, have largely frustrated the compnay’s recent attempt to morve into the Russian market.

Also, while the acquisition of Comdata was a major step forward in FleetCor’s attempt to bring some consolidation to the fragmented fleet market, 2014 also saw a swing and a miss from the American-based enterprise when it made a move on Australia-based CabCharge. The company rebuffed FleetCor’s opening salvos on acquisition.

Nonetheless, Navellier maintains that despite these setbacks and lingering, particularly in Russia, the fact remains that the companies revenue increased by 30 percent so far in 2014.

Since the early 200’s Fleetcor has made over 60 acquisitions in its quest to consolidate the space.  Reportedly its next frontier will be taking on developing an underserved markets.

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