Vantiv Inc (NYSE:VNTV) is one of the oldest and largest credit card processors around. It’s not as big as the more diversified Visa Inc (NYSE:V) or Mastercard Inc (NYSE:MA), but it has been around in one form or another since the 1970s.
By 2000, and the dawn of the internet, VNTV was sitting on a business that included 120,000 merchants and driving ATMs around the world — in France, Germany, Russia, Korea and Taiwan, to name a few.
By the time the internet kicks in over the next decade, VNTV is doing 11.2 billion transactions annually in an average time of 0.59 seconds. And a deal with AT&T Inc. (NYSE:T) in 2014 added a suite of mobile payment products that AT&T will use to encourage more mobile payment options for its massive subscriber base of 88 million.
While V and MA have focused on expanding their market share by expanding their brand, VNTV has been consolidating smaller players and building its size by acquisition. This strategy continues to pay off.
Its margins are strong and growing by double-digits, as is its return on assets and revenue in the third quarter. VNTV reports Q4 figures on Feb. 1, so this week and the next should be an interesting ride. In the past 12 months the stock is up 40%-plus and the past week has seen it continue to climb.
If earnings turn out as good as we expect, VNTV could take off next week. And there is no sign that they won’t.
VNTV is also an interesting play here because it’s a backdoor play on Fifth Third Bancorp (NASDAQ:FITB), one of the nation’s top regional banks.
By spinning off its processing division, it allowed FITB to grow and be valued as a bank while it built a fast growing credit processor. That’s a very smart decision since blurring the lines would make the company hard to value from an analyst’s perspective. VNTV has operations around the globe, and FITB is a regional bank in the Midwest and Southeast.
But the fact is, while there’s a Chinese wall between the two, there is a relationship that goes back to the very beginnings. And it means that VNTV has a great management team with a banker’s eye for deals.
That is evidenced in the fact that VNTV continues to acquire smaller players that are easier to digest than big firms that may slow growth as the acquisition is broken down and integrated. And with the U.S. business friendly environment that the Trump administration is putting in place, there is every reason to believe that VNTV’s best day are still ahead of it.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
