On Wednesday, Total System Services, Inc. (TSS) announced that it will continue providing authorizations and payment services to merchants of Clearent LLC – a payment processing company that caters to financial institutions, ISOs and merchants. The two companies signed a long-term agreement for the same. However, the financial terms of the deal were not disclosed.
We believe that the association between the companies is mutually beneficial. On one hand, the business brought in by Clearent helps in growing the merchant services segment of TSS, thereby generating revenue for the company.
At the same time, it enables Clearent to utilize the technological proficiency of TSS, thereby leading to cost reduction and revenue creation for the company. In fact, Clearent has established many profitable associations with various companies, which allow the company to generate triple-digit growth rates.
On the same day, TSS also announced a mobile application supply deal with IE, the software division of Parseq PLC. The mobile application called TSYS Mobile App was jointly developed by the two companies. It will be integrated onto TSS’s processing platform– TS2.
Accordingly, cardholders can use the application on any smart phone. It will allow them to view their account details on their phone and help them in keeping track of their credit card spending. The users can also choose to receive notifications about their card transactions. However, the application will be available only in Europe at present. TSS believes that there is a huge demand for the product in Europe.
TSS specializes in providing the latest payment solutions and the new application will give it an edge against competitors like Global Payments Inc. (GPN), Green Dot Corporation (GDOT) and Equifax Inc. (EFX).
Earnings Review
TSS reported second-quarter operating earnings of 28 cents per share, beating the Zacks Consensus Estimate by a cent and the year-ago quarter’s earnings by 3 cents per share.
The Zacks Consensus Estimate of earnings is currently at 29 cents per share for the third quarter of 2011, up about 14.4% year-over-year. Of the 17 firms covering the stock, one firm revised the estimate upward while no downward revisions were witnessed in the past 30 days.
For 2011, TSS’s earnings are expected to be $1.12 per share, climbing about 23.9% from 2010. The company currently carries a Zacks #3 Rank, implying a Hold rating for the short term.
On Thursday, the shares of TSS closed at $17.44, down 1.47%, on the New York Stock Exchange.
