VeriFone Systems, Inc. (PAY) shares are soaring, but the company consistently beats expectations. Earnings estimates are also moving higher, pushing the stock to a Zacks #1 Rank (Strong Buy).

Company Description

VeriFone offers electronic payment solutions. These point-of-sales systems can be found at all types of merchants, from gas stations to government entities.

Thanks Google

Just about anything Google is involved in seems to benefit those around it. So, when Google said it will trial mobile-payment services, VeriFone saw a nice boost.

This trial will use a relatively new technology, near-field communications. Google plans to install thousands of VeriFone products that will allow customers to make payments using cell phones and other devices at retail locations.

We did not see estimates move higher, but there was a round of upward revisions just before the announcement, driven by the Mar 1 earnings report.

Another EPS Surprise

VeriFone reported its 7th surprise in the past 8 quarters in early March. The company saw revenue for the fiscal first quarter jump 27% since the previous year. Comments from the company called the quarter “remarkable” thanks to record-setting revenue or $284 million.

Growth rates and margins continue to improve and the company is very optimistic about 2011. EPS came in at $0.35, which was 2 cents better than the Zacks Consensus Estimate.

Rising Estimates

Analysts raised their full-year outlooks right away. The average forecast for this year is up a dime, to $1.57. Next year’s projections are coming in at $1.94 on average, up 22 cents.

If VeriFone hits these targets the annual growth rates will be 49% and 24%, respectively. Although, odds are those levels will increase throughout the year.

The Chart

Thanks to consistent upward estimate revisions, the long-term earnings outlook continues to look fantastic. Each of the colored lines below represent a full-year’s consensus estimate.

You can see below that VeriFone is not only expected to keep growing year over year, but those estimates keep moving higher throughout the year.

VeriFone Systems, Inc. - ticker PAY> <P ALIGN=

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
 
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