As we have all come to realize, the name of the game in online transactions is security. One of the better known referees of the game is headquartered in Mountain View, California.
CyberSource Corporation (NASDAQ:CYBS) provides electronic payment services to firms doing business in Web, call center and point-of-sale environments. Companies use its software to accept credit card payments, process electronic checks, verify personal information and screen for payment fraud. Over 18,000 businesses use CyberSource solutions, including half the companies in the Dow Jones Industrial Average.
The firm pleased the Street last week, when it reported Q4 EPS of nine cents and revenues of $20.9 million. Analysts
had been looking for seven cents and $19.9 million. Management also guided Q1 EPS to four cents (seven cent consensus), Q1 revenues to $20.6 million ($20.17M consensus), FY07 EPS to 36-38 cents (34 cent consensus) and FY07 revenues to $90-$95 million ($89.69M consensus). Investors apparently forgave the light Q1 earnings outlook, because the news popped the share price out of an early January "cup" into the late January "handle" of a Cup & Handle formation. The price is now showing signs of completing the pattern with a bullish rise from the right-hand side of the "handle".
Brokers recommend the issue with three "strong buys", one "buy" and five "holds". Analysts see a 41 percent growth rate, through the next year. The CYBS Sales Growth rate (40.27%), EPS Growth rate (50.00%), Net Profit Margin (20.51%), Return on Assets (18.92%), Return on Investment (21.26%) and Return on Equity (21.26%) compare favorably with industry, sector and S&P 500 averages.
Institutional investors hold about 72 percent of the outstanding CYBS shares. Over the past fifty-two weeks, the stock has traded between $7.76 and $13.48. A stop-loss of $11.25 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.