By Rob Otman
Worldpay (NYSE: WP) is a large cap company that operates within the IT services industry. Its market cap is $24 billion today and the total one-year return is 17.09% for shareholders.
Worldpay stock is underperforming the market. It’s beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Worldpay reported a recent EPS growth rate of 32.56%. That’s below the IT services industry average of 125.17%. That’s not a good sign. We like to see companies that have higher earnings growth.
✗ Price-to-Earnings (P/E): The average price-to-earnings ratio of the IT services industry is 37.41. And Worldpay’s ratio comes in at 70.12. Its valuation looks expensive compared to many of its competitors.
✗ Debt-to-Equity: The debt-to-equity ratio for Worldpay stock is 769.23%. That’s above the IT services industry average of 114.80%. That’s not a good sign.
✗ Free Cash Flow per Share Growth: Worldpay has decreased its FCF per share over the last year relative to its competitors. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth.
✗ Profit Margins: The profit margin of Worldpay comes in at 8.91% today. And generally, the higher, the better. We also like to see this ratio above competitors. Worldpay’s profit margin is below the IT services average of 13.39%. So that’s a negative indicator for investors.
✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Worldpay is 26.11% and that’s above its industry average ROE of 22.63%.
Worldpay stock passes one of our six key metrics today. That’s why our Investment U Stock Grader gives it a Sell.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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