Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
U.S.-based Heartland Payment Systems Inc. delivers credit/debit/prepaid card processing, payroll, check management and payments solutions, to more than 250,000 business locations nationwide. It has a market cap of $1.7-billion (U.S.)
Heartland has grown EPS at a 22-per-cent clip over the long term (using avg of 3 & 5 yr EPS growth rates). It has $71-million in annual earnings versus just $200-million in long-term debt, meaning it could use its earnings to pay off its debt in less than three years, which the Warren Buffett model likes.
The company has increased EPS in each year of past half decade, helping it earn strong interest from the James O'Shaughnessy growth approach. The O'Shaughnessy model also likes its combination of a good relative strength (69) and low price/sales ratio (0.77).
Heartland gets strong interest from the Joel Greenblatt model, which likes its 95-per-cent return on capital, using the EBIT/tangible capital employed metric. The Greenblatt model also likes its 10.3-per-cent earnings yield (EBIT/enterprise value).
The Kenneth Fisher model likes its low price/sales ratio, and positive free cash flow ($1.28 per share)
Heartland has a solid 31-per-cent return on equity, more than four times the industry average (7 per cent). And it has averaged a 30.2-per-cent return on retained earnings over past decade, earning high marks from the Buffett model.
John Reese is long HPY.
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