The Zacks Analyst Blog Highlights: MasterCard, Visa, Heartland Payment
Systems, Total System Services and Perrigo
CHICAGO, Feb. 13, 2013
CHICAGO, Feb. 13, 2013 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include MasterCard Inc. (NYSE:MA), Visa
Inc. (NYSE:V), Heartland Payment Systems Inc. (NYSE:HPY), Total System
Services Inc. (NYSE:TSS) and Perrigo Company (Nasdaq:PRGO).
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Here are highlights from Tuesday's Analyst Blog:
MasterCard Deploys Excess Capital
Following a better-than-expected 2012 financial results, last week MasterCard
Inc. (NYSE:MA) announced higher yield to its shareholders through share
buybacks and dividend increment. This further raised investors' confidence in
this Zacks Rank #3 (Hold) stock.
Accordingly, MasterCard declared a 100% hike in quarterly dividend of 30 cents
per share to 60 cents. The increased dividend will be payable on May 9, 2013
to shareholders of record as on Apr 9, 2013. Based on 124 million shares
outstanding at the end of Jan 2013, the company should be able to return about
$75 million to its shareholders through dividends.
The latest hike takes the annual dividend to $2.40 per share from the previous
$1.20 a share. This aggregates to a dividend yield of 0.46%, based on Monday's
closing price of $520.85, up from the prior yield of 0.23%.
Adding to the wealth of its shareholders, the board of MasterCard also
sanctioned a new share repurchase program worth $2.0 billion, which will be
effective once the buybacks under the previous program worth $1.5 billion,
announced in Jun 2012, is completed. Overall, the company bought back 4.1
million shares worth $1.7 billion in 2012. As of Jan 25, MasterCard had $440
million of stock available for buybacks under the prior authorization.
The decision to amplify the shareholders' return was supported by the
company's increased cash flow in 2012 along with its ability to generate
higher cash flow and earnings in 2013 as well. MasterCard's operating cash
flow improved 9.8% over 2011 to $2.95 billion in 2012.
With no long-term debt and modest growth in expense amid better pricing,
increased number of processed transactions and strong gross dollar value (GDV)
growth, we believe that the company is well-fortified to accelerate growth
from the improving card industry dynamics in 2013, primarily through expansion
in the developing economies. This also justifies MasterCard's aim of returning
higher value from the stock.
Last week, MasterCard reported fourth-quarter 2012 operating earnings per
share of $4.86, which modestly beat the Zacks Consensus Estimate of $4.79 and
the year-ago quarter's earnings of $4.03. Operating net income for the
reported quarter stood at $605 million, up 17.7% from $514 million in the
prior-year quarter. Operating net income also increased 15.5% to $2.77 billion
in 2012 from $2.40 billion in 2011.
Simultaneously, last week close peer – Visa Inc. (NYSE:V), a Zacks Rank #2
(Buy) stock – sanctioned a new share repurchase program worth $1.75 billion,
which is set to expire by Jan 2014. In Oct 2012, Visa also hiked its dividend
by 50%. Hence, the recent expansion in MasterCard's capital deployment is also
in concurrence with maintaining its market position and shareholders'
Other strong performers in the financial transaction services sector include
Heartland Payment Systems Inc. (NYSE:HPY) and Total System Services Inc.
(NYSE:TSS), both of which carry a Zacks Rank #2 (Buy).
Perrigo in Expansion Mode
Perrigo Company (Nasdaq:PRGO) recently announced that it is set to acquire a
UK-based privately held pharmaceutical company, Rosemont Pharmaceuticals Ltd.
and has entered into a definitive merger agreement for the same. The deal is
valued at $283 million.
By acquiring Rosemont Pharma, Perrigo aims to strengthen its position in the
UK oral liquid formulations space. Rosemont Pharma boasts of a portfolio of
more than 90 products. The company generated net sales of more than $60
million in 2012.
The deal is expected to boost Perrigo's adjusted earnings in fiscal 2013 by
$0.08 per share. Perrigo now expects fiscal 2013 earnings in the range of
$5.53 – $5.73 per share (previous guidance: $5.45 – $5.65 per share). The
Zacks Consensus Estimate of $5.56 per share is towards the lower end of the
company's guidance range.
We note that Perrigo has been quite active on the acquisition front lately. In
a bid to strengthen its position in the over-the-counter (OTC) retail pet
healthcare market, just a few days back Perrigo inked a deal to buy animal
health company Velcera, Inc. for $160 million in cash. The deal is expected to
close in calendar year 2013.
In Dec 2012, Perrigo acquired privately-held Cobrek Pharmaceuticals, Inc. for
approximately $45 million in cash. In Oct 2012, Perrigo had acquired the
entire assets of privately-held Sergeant's Pet Care Products, Inc.
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