Why Shares of Cardtronics Sank Today

By Timothy Green Markets Fool.com

What happened

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Non-bank ATM operator Cardtronics (NASDAQ: CATM) slumped on Friday despite reporting fourth-quarter results that beat analyst estimates on all fronts. The culprit driving the decline may be the company's 2017 guidance, which calls for a decline in adjusted EPS. At 2:30 p.m. EST, the stock was down about 10%.

So what

Cardtronics reported fourth-quarter revenue of $309.8 million, up 2% year over year and about $1 million higher than the average analyst estimate. ATM operating revenues rose 1%, or 7% adjusting for movements in currency exchange rates. Cardtronics pointed to the appreciation of the U.S. dollar relative to the British pound as a major headwind.

Image source: Getty Images.

Non-GAAP EPS came in at $0.79, up from $0.71 during the prior-year period and $0.01 better than analysts were expecting. Cardtronics CEO Steve Rathgaber pointed to the company's strong growth adjusted for currency during 2016, as well as some changes set for 2017:

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"The fourth quarter results capped another year of double-digit growth on the top and bottom line, adjusting for currency movements. We are proud of this track record of consistent delivery of strong financial performance. Looking ahead, 2017 will be a transitional year for Cardtronics with the addition of the DCPayments business and our withdrawal from the 7-Eleven locations in the U.S."

Now what

Cardtronics expects to produce revenue between $1.45 billion and $1.5 billion in 2017, up from $1.265 billion in 2016. This guidance includes the effects of the removal of the company's ATMs from 7-Eleven locations in the United States. The removal is expected to begin during the third quarter.

One reason for the stock's decline on Friday could be the company's earnings guidance. Cardtronics expects non-GAAP EPS to be in the range of $2.80 to $3 in 2017, down from $3.26 in 2016. The loss of the 7-Eleven business, which carried a gross margin of 45% compared to 36% for the company as a whole in 2016, will hurt the bottom line.

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Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.