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ACI Worldwide Q3 Earnings: Can NasdaqGS:ACIW Hit Its $0.31 EPS Target?

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ACI Worldwide, Inc. (NasdaqGS:ACIW) is scheduled to report Q3 earnings results on November 5, 2020.

The company is expected to report earnings of $0.31/share on revenue of $310 million. The consensus earnings per share (EPS) of $0.31/share is based on a poll of 5 analysts and represents a growth in eps of 11.8% over the same quarter last year, when the company reported earnings of $0.28/share.

The revenue forecast of $310 million based on a poll of 5 analysts implies a year-over-year (YoY) decline in revenue of −12.7%. Last year the company reported $354.9 million in revenue for the quarter.

Expected to report EPS growth of 11.8% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $310.00 $354.90 −12.7%
EPS $0.31 $0.28 11.8%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, and missed expectations 4 quarters.

What are your expectations from ACI Worldwide, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.08 $0.15 80.1% Beat
Q1, 2020 $0.10 -$0.16 −259.6% Missed
Q4, 2019 $0.71 $0.48 −32.3% Missed
Q3, 2019 $0.25 $0.28 10.2% Beat
Q2, 2019 -$0.05 $0.19 475.8% Beat
Q1, 2019 -$0.14 -$0.20 -35.4% Missed
Q4, 2018 $0.88 $0.75 −14.3% Missed
Q3, 2018 $0.07 $0.14 101.3% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 7.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 6, 2020 $28.43 $30.50 7.3% Increase
May 7, 2020 $26.31 $27 2.6% Increase
February 27, 2020 $29.80 $27.87 −6.5% Decline
November 7, 2019 $31.62 $34.40 8.8% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.42, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.42 implies a 0.8% chance of earnings manipulation.

Fundamentals And Technical Analysis

ACI Worldwide, Inc. is currently trading at $29.17/share, down −0.8% for the day. The company is trading at approximately 74.1% of its 52-week high of $39.37/share. The company’s stock price is down −4.4% since the last earnings report and down −9.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 50.05 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:ACIW Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 44.12 and a forward P/E multiple of 21.25.

ACI Worldwide, Inc.’s current share price also implies a price-to-book (P/B) multiple of 3.11. The following table summarizes some other key fundamental ratios:

Data as of November 1, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $29.17
P/E Ratio 44.1x
P/E Ratio (Fwd) 21.2x
PEG Ratio −5.7
Total Debt / Total Capital 29.0%
Levered Free Cash Flow $182.5 million
EV / EBITDA 18.5x

Finbox

ACI Worldwide, Inc. is a mid-cap stock with a market capitalization of $3.395 billion and a total enterprise value of $4.665 billion. The company operates in the Information Technology sector and the Software industry.

ACI Worldwide, Inc. develops, markets, installs, and supports a range of software products and solutions for facilitating electronic payments to banks, financial intermediaries, merchants, and billers worldwide. The company offers UP Retail Payments solution that enables banks and financial intermediaries to accept, authorize, route, and secure payment transactions; and ACI Card and Merchant Management solutions, such as credit, debit, smart card, and prepaid card issuance and management, as well as merchant account management and settlement. It also provides UP Immediate Payments solution that enables banks and payment service providers to meet real-time payment schemes and create various products; and UP Real-Time Payments solution that allows banks to address real-time gross settlement, SWIFT messaging, automated clearing house, and real-time payments. The company offers ACI ReD Shield, a real-time fraud prevention solution; Postilion; ACI PAY.ON Payments Gateway; UP eCommerce Payments solution; UP Payments Risk Management solution; and ACI Universal Online Banker platform. It also provides ACI Speedpay solutions that enable customers to electronically present bills and collect payments from consumers through a single and integrated platform that controls bill payments operation. The company offers electronic bill presentment and payment services to consumer finance, insurance, healthcare, higher education, utility, government, and mortgage sectors; implementation services, including product installations and configurations, and custom software modifications; and business and technical consultancy, and on-site support services, as well as distributes or acts as a sales agent for software developed by third parties. It markets its products under the ACI brand. The company was formerly known as Transaction Systems Architects, Inc. and changed its name to ACI Worldwide, Inc. in July 2007. The company was founded in 1975 and is headquartered in Naples, Florida.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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