Shift4 (FOUR): 3 Reasons We Love This Stock

Shareholders of Shift4 would probably like to forget the past six months even happened. The stock dropped 45.2% and now trades at $46.88. This was partly driven by its softer quarterly results and might have investors contemplating their next move.

Following the pullback, is this a buying opportunity for FOUR? Find out in our full research report, it’s free.

Why Are We Positive On Shift4?

Starting as a payment gateway provider in 1999 and now processing over $200 billion in annual payment volume, Shift4 Payments (NYSE:FOUR) provides integrated payment processing solutions and software that help businesses accept and manage transactions across in-store, online, and mobile channels.

1. Skyrocketing Revenue Shows Strong Momentum

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

Over the last five years, Shift4 grew its revenue at an incredible 40.4% compounded annual growth rate. Its growth beat the average financials company and shows its offerings resonate with customers.

2. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Shift4’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.

3. Market-Beating ROE Showcases Attractive Growth Opportunities

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, Shift4 has averaged an ROE of 14.2%, healthy for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Shift4 has a decent competitive moat.

Final Judgment

These are just a few reasons why we're bullish on Shift4. With the recent decline, the stock trades at 8.5× forward P/E (or $46.88 per share). Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

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