What to expect from EVERTEC's (EVTC) Q3 earnings

What happened

EVERTEC, a payment processing company, will report earnings this Tuesday after market hours. Last quarter it reported revenue of $274.8 million, up 19.7% year on year, and beat analysts' estimates for EBITDA, which means earnings before interest, taxes, depreciation and amortization, and earnings per share.

Confirmed

Global impact / market context

Investors are watching whether EVERTEC can repeat last quarter's strong beat. Analysts expect revenue growth of 19.3% this quarter, improving from last year's 7.9%. A miss could hurt the stock, while a beat may support positive sentiment around the payment processing business.

Analyst inference

Peer results are mixed. Donnelley Financial Solutions reported 5.5% revenue growth and beat estimates, with its stock up 25.9% after results. WEX reported 12.8% growth and also beat estimates, yet its stock fell 3.3%, showing that beats alone do not guarantee share price gains.

Analyst inference

What to watch

1. EVERTEC will announce results this Tuesday after market hours. Watch whether reported revenue and profit meet the analyst estimates that were reconfirmed over the last 30 days, which suggests analysts expect the business to stay the course. Confirmed
2. Watch whether EVERTEC matches or beats the expected 19.3% year-on-year revenue growth this quarter. That figure would improve on the 7.9% increase recorded in the same quarter last year. Proposed
3. Watch how the stock reacts to the results, using peer moves as a guide. Donnelley rose 25.9% after its beat while WEX fell 3.3% despite beating, so reaction may depend on expectations. Analyst inference

Evidence

• stockstory.org