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Evertec (EVTC)
NYSE:EVTC
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Evertec
(NYSE:EVTC)
Rating:81Outperform
Price Target:
$42.00
▲( 15.58% Upside)
Positive Factors
Acquisitions
The acquisitions of Grandata and Nubity are impacting results positively, with reported revenue rising significantly, including strong growth in LatAm.
Earnings
Evertec reported solid results with revenue and adjusted EBITDA ahead of estimates.
Growth Potential
Commentary and reported results suggest growth in Brazil continues to accelerate, with management affirming expectations of low-double-digit growth for the LatAm segment.
Negative Factors
Contract Renegotiation
Management expressed confidence in various cost initiatives to mitigate the upcoming revenue headwind related to the renegotiated contract with Popular.
Margin Compression
The downgrade of EVTC was anchored on prospective margin compression primarily from the downside leverage from the LatAm expansion and the BPOP renewal.
Evertec (EVTC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.33B
Dividend Yield0.54%
Average Volume (3M)303.10K
Price to Earnings (P/E)18.2
Beta (1Y)0.74
Revenue Growth17.39%
EPS Growth100.46%
CountryUS
Employees4,800
SectorTechnology
Sector Strength77
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)0.87
Shares Outstanding64,028,080
10 Day Avg. Volume393,513
30 Day Avg. Volume303,101
Financial Highlights & Ratios
PEG Ratio1.27
Price to Book (P/B)4.44
Price to Sales (P/S)0.00
P/FCF Ratio12.39
Enterprise Value/Market Cap1.34
Enterprise Value/Revenue0.93
Enterprise Value/Gross Profit7.44
Enterprise Value/Ebitda2.66
Forecast
1Y Price Target
$40.00Price Target Upside10.07% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Evertec Business Overview & Revenue Model
Company DescriptionEVERTEC, Inc. engages in transaction processing business in Latin America and the Caribbean. The company operates through Payment Services - Puerto Rico & Caribbean; Payment Services - Latin America; Merchant Acquiring; Business Solutions, and Corporate and Other segments. It provides merchant acquiring services, which enable point of sales and e-commerce merchants to accept and process electronic methods of payment, such as debit, credit, prepaid, and electronic benefit transfer (EBT) cards. The company also offers payment processing services that enable financial institutions and other issuers to manage, support, and facilitate the processing for credit, debit, prepaid, automated teller machines, and EBT card programs; credit and debit card processing, authorization and settlement, and fraud monitoring and control services to debit or credit issuers; and EBT services. In addition, it provides business process management solutions comprising core bank processing, network hosting and management, IT consulting, business process outsourcing, item and cash processing, and fulfillment solutions to financial institutions, and corporate and government customers. Further, the company owns and operates the ATH network, an automated teller machine and personal identification number debit networks. It manages a system of electronic payment networks that process approximately three billion transactions. The company sells and distributes its services primarily through direct sales force. It serves financial institutions, merchants, corporations, and government agencies. EVERTEC, Inc. was founded in 1988 and is headquartered in San Juan, Puerto Rico.
How the Company Makes MoneyEvertec makes money primarily through transaction fees and service agreements associated with its payment processing and merchant acquiring services. In the Merchant Acquiring segment, Evertec earns revenue by charging transaction fees to merchants for processing credit and debit card payments. The Payment Processing segment generates income by providing financial institutions with processing services for ATM, POS, and electronic transactions. Additionally, the Business Solutions segment contributes to revenue through software licensing fees and IT service contracts for a variety of business applications. Strategic partnerships with banks and financial institutions, as well as expanding its service offerings, play a significant role in driving Evertec's earnings.
Evertec Financial Statement Overview
Summary
Evertec's financial performance is strong, with robust revenue and profit growth, efficient cost management, and solid cash flow generation. Despite a leveraged balance sheet, the company maintains operational efficiency, with potential risks mitigated by profitability and cash flow trends.Income Statement
Evertec's income statement reveals robust revenue growth with a 4.4% increase over the last year as per TTM data. Gross profit margin stands at a solid 48.0%, indicating healthy profitability. The net profit margin improved to 14.9%, demonstrating effective cost management. EBIT and EBITDA margins of 21.0% and 34.0% respectively reflect strong operational efficiency.85
Very Positive
Balance Sheet
The balance sheet shows a moderate debt-to-equity ratio of 1.76, which indicates a leveraged position. However, return on equity has improved to 23.9%, showing effective use of equity to generate profits. The equity ratio is 28.3%, suggesting a reasonable equity cushion against liabilities.78
Positive
Cash Flow
Evertec demonstrates strong cash flow management with a free cash flow to net income ratio of 1.51, indicating significant cash generation capability. Operating cash flow to net income ratio is 2.02, further highlighting efficient cash operations. Free cash flow growth rate of 13.7% underlines a positive cash flow trajectory.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 868.96M | 845.49M | 694.71M | 618.41M | 589.80M | 510.59M | Gross Profit |
| 417.43M | 439.07M | 357.95M | 325.79M | 339.63M | 283.72M | EBIT |
| 182.36M | 165.67M | 136.16M | 157.40M | 196.51M | 141.39M | EBITDA |
| 295.48M | 337.37M | 211.29M | 374.35M | 278.38M | 221.26M | Net Income Common Stockholders |
| 129.34M | 112.62M | 79.72M | 239.01M | 161.13M | 104.44M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 265.86M | 273.64M | 295.60M | 197.23M | 266.35M | 202.65M | Total Assets |
| 1.92B | 1.86B | 2.06B | 1.13B | 1.14B | 1.07B | Total Debt |
| 955.37M | 966.58M | 986.41M | 446.97M | 486.57M | 523.52M | Net Debt |
| 689.50M | 692.94M | 690.81M | 249.74M | 220.22M | 320.87M | Total Liabilities |
| 1.33B | 1.34B | 1.42B | 657.00M | 674.49M | 730.15M | Stockholders Equity |
| 542.10M | 472.52M | 594.29M | 471.51M | 466.21M | 337.74M |
| Cash Flow | Free Cash Flow | ||||
| 195.18M | 171.63M | 139.31M | 140.83M | 161.51M | 150.45M | Operating Cash Flow |
| 261.73M | 260.06M | 224.29M | 223.36M | 228.42M | 199.09M | Investing Cash Flow |
| -118.61M | -118.28M | -507.93M | -133.32M | -83.82M | -48.63M | Financing Cash Flow |
| -163.75M | -152.56M | 403.27M | -156.77M | -81.28M | -62.62M |
Evertec Technical Analysis
Positive
36.34
Price Trends
35.33
Positive
34.59
Positive
34.17
Positive
Market Momentum
0.83
Negative
53.76
Neutral
38.69
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EVTC, the sentiment is Positive. The current price of 36.34 is above the 20-day moving average (MA) of 35.84, above the 50-day MA of 35.33, and above the 200-day MA of 34.17, indicating a bullish trend. The MACD of 0.83 indicates Negative momentum. The RSI at 53.76 is Neutral, neither overbought nor oversold. The STOCH value of 38.69 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for EVTC.
Evertec Risk Analysis
Evertec disclosed 43 risk factors in its most recent earnings report. Evertec reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
Purchases of our common stock pursuant to our stock repurchase plan may affect the value of our common stock, and there can be no assurance that our stock repurchase plan will enhance stockholder value. Q4, 2024
2.
The regulatory framework governing the use of AI and machine learning technology is rapidly evolving, and we cannot predict how future legislation and regulation will impact our ability to offer products or services that we develop which leverage artificial intelligence and machine learning technology. Q4, 2024
3.
Exposure to foreign exchange fluctuations and capital controls may adversely affect our costs, earnings and the value of some of our assets. Q4, 2024
Evertec Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $3.21B | 24.93 | 26.10% | ― | 33.84% | 0.29% | |
81 Outperform | $2.33B | 18.22 | 24.65% | 0.54% | 17.39% | 100.46% | |
75 Outperform | $2.92B | 7.20 | 14.36% | ― | 2.38% | 9.88% | |
71 Outperform | $2.46B | 22.78 | 15.97% | ― | 14.86% | -0.94% | |
71 Outperform | $2.43B | 51.84 | 5.01% | ― | -8.44% | ― | |
61 Neutral | $3.67B | 8.73 | -8.85% | ― | -14.03% | -167.03% | |
61 Neutral | $11.29B | 10.07 | -7.05% | 2.96% | 7.47% | -10.75% |
* Technology Sector Average
Performance Comparison
EVTC
Evertec
36.34
1.26
3.59%
PAGS
Pagseguro Digital
8.64
-3.44
-28.48%
STNE
Stoneco
13.28
-1.01
-7.07%
PAYO
Payoneer
6.81
0.78
12.94%
MQ
Marqeta
5.07
-0.31
-5.76%
DLO
DLocal
11.26
1.70
17.78%
Evertec Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: 5.15%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong start to 2025 for EVERTEC, with notable revenue growth, improved margins, and positive performance across segments, particularly in Latin America. However, challenges such as currency headwinds, attrition from key clients like MercadoLibre, and potential macroeconomic impacts from tariffs were also highlighted.Q1-2025 Updates
Positive Updates
Strong Revenue Growth
EVERTEC reported revenue of $228.8 million for Q1 2025, an 11.4% increase over the prior year, with constant currency revenue growth at 15%.
Adjusted EBITDA and Margin Improvement
Adjusted EBITDA was $89.4 million, up 14% year-over-year, with a margin increase of 100 basis points to 39.1%.
Adjusted EPS Growth
Adjusted EPS increased by 21% year-over-year to $0.87, driven by strong EBITDA growth, lower interest expense, and reduced share count.
Robust Performance in Latin America
LatAm revenue grew 13% year-over-year or 22% in constant currency, with strong contributions from the GetNet Chile relationship and the reacceleration of the Brazil business.
Improved 2025 Outlook
EVERTEC raised its constant currency revenue growth expectations for 2025 to 6.8%-7.7%, up from 5.5%-6.7%.
Merchant Acquiring Segment Success
Net revenue increased 11% year-over-year to $47.6 million, with a significant margin increase of 510 basis points to 42.7%.
Financial Stability
Strong liquidity with approximately $460 million as of March 31 and a net debt to trailing 12-month adjusted EBITDA of approximately 2.04x.
Negative Updates
Currency Headwinds
Currency fluctuations posed a headwind of approximately 3.3% for the quarter, mainly due to the Brazilian real.
Challenges in Business Solutions Margin
Business Solutions segment saw a 4% decrease in adjusted EBITDA and a margin decline of 580 basis points due to revenue mix shift towards lower margin hardware and software sales.
MercadoLibre Attrition Impact
The loss of the MercadoLibre account is expected to impact revenue from Q2 onwards, with notable attrition expected in Latin America.
Potential Impact of Tariffs
Concerns over tariffs affecting customer confidence and economic conditions in countries like Brazil and Chile, which could disrupt payment volumes.
Company Guidance
During the EVERTEC First Quarter 2025 Earnings Call, management provided a strong outlook for the year despite macroeconomic uncertainties. Key financial metrics were highlighted, including a quarterly revenue of $228.8 million, marking an 11.4% increase year-over-year, with currency headwinds of approximately 3.3%. Adjusted EBITDA grew by 14% to $89.4 million, with a margin of 39.1%, up 100 basis points. Adjusted EPS rose by 21% to $0.87, supported by adjusted EBITDA growth and lower interest expenses. The company generated $37.6 million in operating cash flows and returned $3.2 million to shareholders through dividends. EVERTEC's liquidity was reported at $460 million as of March 31, 2025, and net debt stood at $704 million, with a leverage ratio of approximately 2.04x. For 2025, the company anticipates constant currency revenue growth of 6.8% to 7.7% and adjusted EPS growth of 4.9% to 7.6%, with an expected adjusted EBITDA margin between 39.5% and 40.5%.Evertec Corporate Events
Dividends
Evertec Declares Quarterly Dividend for Shareholders
Neutral
May 2, 2025
On May 2, 2025, EVERTEC, Inc.’s Board of Directors declared a regular quarterly cash dividend of $0.05 per share, to be paid on June 6, 2025, to stockholders of record as of May 13, 2025. The Board anticipates continuing this dividend in future quarters, although future declarations are subject to approval and may change based on business needs or market conditions.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.