Earnings Season Grinds On For Payments Firms

Stocks and Bull Run

Is it any surprise that earnings season continued (and still continues) to dominate the movements of payments stocks? If there were a motto for the past week, it would be “live by the earnings beat, die by the earnings beat.”

Among the companies that enjoyed some heady gains, Square stood out for its quarter, which showed some strong growth in terms of payments processing volume, gaining double digits. Most notable in the quarter, as evidenced by management commentary, was the fact that more large merchants (defined as volumes of at least $125,000) have been signing on with Square. And in addition, Square Capital continues to see strength in demand for online lending, despite the negative headlines that have dominated the alternative lending space. The stock was up just slightly more than 7 percent on the week.

Square’s performance was followed closely by MoneyGram International, which also showed strong results for the quarter that ended in September. The standout here was the digital payments business, which saw 12 percent growth year over year. The stock was up 7 percent, too.

This is not to say that all was rosy among payments firms. The biggest loser lost … well, a lot. The casualty of note this past week was FleetCor Technologies, which beat results by $0.06 a share. Nonetheless, it simply bracketed guidance for the remainder of the year, which implies some amount of caution heading into the remaining several weeks of 2016. Lower fuel prices, management noted on the call, have had a drag on business, including in North America. And though transaction growth was north of 50 percent in some geographies, headwinds came from Latin America and other areas. New business activities were soft enough, according to commentary on the call with analysts, that firmwide new sales bookings were up only 7 percent. As a result, FleetCor shares slid 15 percent through the week.