FleetCor Technologies (FLT) Down 24.2% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for FleetCor Technologies (FLT). Shares have lost about 24.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is FleetCor Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

FLEETCOR Beats Q4 Earnings Estimates, Lags on Revenues

FLEETCOR Technologies reported mixed fourth-quarter 2019 results wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.

Adjusted earnings of $3.17 per share outpaced the consensus estimate by 0.9% and increased 14% year over year. Revenues of $681.05 million missed the consensus mark by 0.7% but increased 9% year over year on a reported basis and 10% on a pro-forma and macro-adjusted basis.

Organic revenues rose 10% in the reported quarter, driven by solid double-digit growth across the company’s product categories namely fuel, corporate payments, tolls and lodging. Its fuel card business was up 9%, corporate payments increased 14%, toll business grew 17% and lodging business increased 14% organically.

In the reported quarter, new sales or new bookings increased 13%, client revenue retention remained steady at over 91% and the company’s same-store sales were impacted mainly by the weak trucking vertical.

Revenues in Detail

Segment-wise, revenues from North America came in at $451 million, up 6.5% year over year. Internationally, revenues of $247.88 million increased 12.7% year over year.

Product category-wise, fuel revenues of $299.3 million were almost flat year over year on a reported basis and improved 9% on a pro-forma and macro-adjusted basis.

Corporate Payments revenues of $140.3 million increased 21% year over year on a reported basis and 14% on a pro-forma and macro-adjusted basis.

Tolls revenues of $93.3 million improved 8% year over year on a reported basis and 17% on a pro-forma and macro-adjusted basis.

Lodging revenues of $64.2 million increased 48% year over year on a reported basis and 14% on a pro-forma and macro-adjusted basis.

Gift revenues of $47.7 million decreased 1% year over year on a reported basis and 6% on a pro-forma and macro-adjusted basis.

Other revenues of $54.1 million increased 7% year over year on a reported basis and 12% on a pro-forma and macro-adjusted basis.

Operating Results

Operating income increased 12.7% from the prior-year quarter to $320.80 million. Operating income margin rose to 45.9% from 44.3% in the prior-year quarter.

Balance Sheet & Cash Flow

FLEETCOR exited fourth-quarter 2019 with cash, cash equivalents and restricted cash of approximately $1.68 billion compared with $1.47 billion at the end of the prior quarter.

The company generated $370.94 million of net cash from operating activities. Capital expenditures totaled $26.49 million. In the reported quarter, FLEETCOR repurchased approximately 2.2 million shares for $632.5 million.

Guidance

For 2020, FLEETCOR unveiled its revenue and adjusted earnings guidance. Total revenues are anticipated in the range of $2.90-$2.96 billion. Adjusted earnings are expected in the range of $13.35-$13.75 per share. Organic revenues are expected to register 9-11% growth.

For first-quarter 2020, adjusted EPS is expected in the range of $2.90-$3.00.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, FleetCor Technologies has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. Notably, FleetCor Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.