Why Cardtronics Inc.'s Shares Surged

By Alex PlanesFool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Cardtronics are trading nearly 6% higher this afternoon following an opening-bell pop that sent the stock surging by almost 12%. Investors have piled in today in response to the ATM provider's better-than-expected earnings report after Wednesday's closing bell.

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So what: Cardtronics reported $283.9 million in revenue and $0.64 per share in adjusted earnings for the fourth quarter, which represented improvements of 17% and 31%, respectively, over the year-ago quarter's result. These figures handily beat Wall Street's expectations for $270.6 million in revenue and $0.57 in adjusted EPS. The company expects to earn between $2.74 and $2.83 per share in adjusted earnings, on revenue ranging from $1.17 billion to $1.2 billion, for 2015. This guidance compares favorably, particularly on the bottom line, to Wall Street's expectations for$1.17 billion in revenue and $2.70 in adjusted EPS.

Now what: As an ATM operator, Cardtronics must contend with currency exchange rates that have been a bit wobbly in recent months due to a number of macroeconomic factors. The company's shares are also not cheap on a generally accepted accounting principles basis, with a current P/E ratio of 44. However, Cardtronics' trailing 12-month price-to-free cash flow ratio is a much more reasonable 23.8, even after today's pop, and the midpoint of its 2015 EPS guidance suggests an adjusted P/E of just 13.7, which is extremely reasonable in light of its anticipated 42% to 46.6% adjusted EPS growth rate over the coming year. This was a good report in many ways, and Cardtronics certainly appears worth watching, or possibly even nibbling on, at its current level.

The article Why Cardtronics Inc.'s Shares Surged originally appeared on Fool.com.

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