Investments

Earnings Season Sways Payments Stocks

Perhaps it is no surprise, but earnings season held sway over Wall Street this past week, and the same was true for payments stocks. As an overall trend, advancing issues predominated over declining ones.

Amid names that gained ground, Diebold Nixdorf recovered some of the declines it logged in recent weeks in the wake of an earnings warning earlier this month. The company’s results showed a loss of 41 cents per share on revenues of $1.1 billion. But in discussing the quarter, management stated it was taking steps to reduce costs and address the delays in firming up customer contracts. These actions led to the top line being approximately $300 lower than expected, mainly tied to hardware.

The ATM segment also experienced some disruption. Management said, in general, beyond the sales hiccups that led to the July pre-announcement, the trend was toward improvement with backlog growth in place. Shares gained more than 6 percent for the week.

Shares of Mitek Systems were also up more than 6 percent on the week. Though no company-specific headlines crossed the wires, it should be noted that Mitek was featured as an innovator at the end of last month, and CEO James DeBello spoke to PYMNTS’ Karen Webster about what drives innovation in the mobile industry.

Blackhawk Network shares rallied more than 5 percent on the week, and earnings of 12 cents per share beat Wall Street at a nickel per share. Blackhawk Network management stated on a conference call that retail sales — both physical and digital — are recovering in the wake of Europay, Mastercard and Visa (EMV), and digital sales are on the upswing. They now represent approximately 9 percent of U.S. gift card volume.

Turning to the losses columns, the biggest decliner was Alliance Data Systems as shares slid 8.9 percent, weighed down by earnings. The top line was slightly shy of analyst expectations, at $1.82 billion — the Street looked for $1.84 billion. But it was forward guidance that may have been the culprit in the stock selloff, including timing issues related to its BrandLoyalty marketing arm. The revenue guidance was boosted to $7.8 billion from $7.7 billion, but earnings per share (EPS) lowered to $18.10 from $18.50. Wall Street had been there on the top line, but projected EPS was $18.54.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The September 2019 AML/KYC Tracker Report provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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