Transaction Systems Architects: Facilitating electronic commerce

Posted Jul 5th 2007 1:25PM by Larry Schutts
Filed under: Earnings Reports, Bank of America (BAC), BB and T (BBT), Technical Analysis, First Data (FDC)

As the world's payment systems shift from paper to pulse, world commerce becomes increasingly dependent on the reliability and integrity of transaction software specialists. Among the leaders in the field is a New York firm that has been serving financial clients for almost thirty years.

Transaction Systems Architects (NASDAQ: TSAI) sells software products and services that make electronic payments possible. The programs process transactions involving ATMs, credit cards, debit cards, wire transfers, home banking services and point-of-sale terminals. Company services involve design, implementation and facilities management. Customers include financial institutions, retailers and e-payment processors. Bank of America (NYSE: BAC) and BB & T Corporation (NYSE: BBT) are two of the big names on the firm's client list. First Data Corporation (NYSE: FDC) is a major competitor.

The company updated its 2007 estimates last month, predicting adjusted EPS of $1.51-$1.80 and revenues of $428-$447 million. Those ranges encompassed the consensus Street views of $1.66 and $436 million. The news helped to keep TSAI shares cycling through a positive seven-week trading channel. The price is currently consolidating at the base of that channel, where oversold Momentum, Stochastic, CCI and MACD technical parameters suggest the potential for a rise back toward the top. The approximate correspondence of the stock's 50-day moving average to the base of the channel backs the rebound notion.

Brokers recommend the issue with four "strong buys," one "buy" and one "hold." Analysts see a 49% growth rate, through the next year. The TSAI PEG ratio (1.2), Price to Free Cash Flow ratio (22.89), Return on Assets (12.33%) and Return on Equity (22.85%) compare favorably with industry, sector and S&P 500 averages.

Institutions hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $28.10 and $38.72. A stop-loss of $29.00 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

Tags: BAC, BBT, FDC, fundamental analysis, FundamentalAnalysis, technical analysis, TechnicalAnalysis, trading channel, TradingChannel, Transaction Systems Architects, TransactionSystemsArchitects, TSAI