Shift4 ($FOUR) is posting profit growth far above other companies in its industry group.
Its fourth-quarter earnings soared 488%. That was the biggest quarterly gain among 40 companies in the credit card and payments industry group, except for the thinly-traded CPI Card Group (PMTS).
Revenue growth in Q4 was above average for the industry group, up 35%, slowing from 68%, 44%, and 45% in the previous three quarters.
With first-quarter results due in early May, Shift4 is not letting up. Analysts expect earnings to swell 117% to 33 cents per share. Sales are estimated to climb 29% to $192.3 million.
IPO Stock's Growth Should Continue
Longer-term growth estimates are also bullish, with profits expected to rise 52% this year and another 43% in 2024.
While Visa (V) and Mastercard (MC) are the industry's giants (market caps of $431 billion and $352 billion), there are dozens of smaller companies competing for digital payments. And Shift4 is emerging.
Allentown, Pa.-based Shift4 gets most of its revenue processing payments in the hotel, restaurant, and casino industries. If the U.S. economy sinks into a recession, those industries would surely see their results weaken.
Shift4 has expanded into stadiums, airlines, charities, and food and beverage companies. And it's expanding into Europe through acquisitions.
In a favorable sign, Shift4 seems untouched by the banking crisis, a Bank of America analyst noted. Other analysts see potential in the company's subscription-based profit model.
IPO Stock Forming Unusual Base Pattern
The stock is forming an ascending base. You don't see many of those patterns, and they can sneak up during a price uptrend. The base consists of three pullbacks of typically 10% to 20% over a period of nine to 16 weeks. MarketSmith pattern recognition is adjusted to identify pullbacks of 6% to 25% in ascending bases.
As with other bases, look for a buy point 10 cents above the highest level in the pattern. For Shift4, that entry is at 76.50. Volume should climb at least 40% above average when the stock tops the buy point.
Shift4 came public at $23 per share in June 2020. The IPO stock rose as high as 104.11 in April 2021 before surrendering the entire gain, to a low at 29.39 last July. Shares have been recovering since then, and the ascending base is the second pattern of that recovery process.
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