Shift4 Payments, Inc. (FOUR) Stock Analysis and Metrics

Sector: Technology Industry: Software - Infrastructure CIK: 0001794669

Market Cap 4.08 Bn

P/B 2.45

P/E 24.00

P/S 1.05

ROIC (Qtr) 2.66

Div Yield % 0.00

Rev 1y % (Qtr) 29.44

Total Debt (Qtr) 4.79 Bn

Debt/Equity (Qtr) 2.87

About

Shift4 Payments, Inc., often referred to as Shift4, operates in the payment processing industry, providing a range of services to merchants in the United States. The company's main business activities include payment processing, point-of-sale (POS) solutions, and business intelligence tools. Shift4's operations span across various countries and regions, with a primary focus on the United States. The company generates revenue through fees paid by its merchants, which primarily include a processing fee charged as a percentage of end-to-end payment...

Shift4 Payments, Inc., often referred to as Shift4, operates in the payment processing industry, providing a range of services to merchants in the United States. The company's main business activities include payment processing, point-of-sale (POS) solutions, and business intelligence tools. Shift4's operations span across various countries and regions, with a primary focus on the United States.

The company generates revenue through fees paid by its merchants, which primarily include a processing fee charged as a percentage of end-to-end payment volume or as a fee per transaction. Additionally, Shift4 generates subscription revenue from licensing its POS software, business intelligence tools, and other technology solutions. The company's payments platform is a significant revenue generator, providing omni-channel card acceptance and processing solutions across multiple payment types, including credit, debit, contactless card, mobile wallets, and alternative payment methods. This platform is integrated with over 500 software suites, making it a key differentiator for Shift4.

Shift4's technology solutions are designed to streamline business operations, drive growth through strong consumer engagement, and improve business intelligence. These solutions include SkyTab POS, VenueNext, Lighthouse, SkyTab Mobile, and The Giving Block. The company's commitment to innovation and customer service has helped it build a loyal customer base. Shift4's competitive advantages include reputation, domain expertise, scale of distribution channels, breadth of offerings, simplicity and ease-of-use of solutions, pace of innovation, price, data security, and customer service.

The company's customers include a wide range of merchants, primarily located in the United States, but also in other countries. These merchants include restaurants, retailers, and service providers. Shift4's position within the industry is strong, with a reputation for providing reliable and secure payment processing solutions.

Shift4's primary products and services include its payments platform, POS solutions, and business intelligence tools. The payments platform provides omni-channel card acceptance and processing solutions across multiple payment types, while the POS solutions are designed to streamline business operations and improve consumer engagement. The business intelligence tools provide merchants with insights into their business operations and customer behavior.

Price action

Investment thesis

Bull case

Healthy cash reserves of 1.51B provide 2.11x coverage of short-term debt 717.40M, demonstrating strong liquidity position and minimal refinancing risk.
Robust free cash flow of 345.10M exceeds capital expenditure of 210.60M by 1.64x, indicating strong organic growth funding capability.
Tangible assets of 3.62B provide exceptional 258.33x coverage of deferred revenue 14M, showing strong service capability backing.
Operating cash flow of 555.70M provides strong 39.69x coverage of deferred revenue 14M, indicating service delivery capability.
Cash position of 1.51B provides exceptional 39.26x coverage of minority interest expenses 38.50M, indicating strong liquidity.

Bear case

Operating cash flow of 555.70M barely covers its investment activities of (3.04B), with a coverage ratio of -0.18, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
Cash reserves of 1.51B provide limited coverage of acquisition spending of (2.82B), which is -0.54x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
Operating earnings of 369.20M show weak coverage of depreciation charges of 382.20M, with a 0.97 ratio indicating high capital intensity and potential reinvestment needs.
High depreciation of 382.20M relative to operating cash flow of 555.70M, which is 0.69x suggests significant maintenance capital requirements affecting free cash flow.
Free cash flow of 345.10M represents just 0.18x of debt issuance 1.96B, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Product and Service Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Software - Infrastructure

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	MSFT	Microsoft Corp	3,197.34 Bn	26.81	10.47	57.61 Bn
2	ORCL	Oracle Corp	506.93 Bn	48.84	12.87	124.39 Bn
3	PLTR	Palantir Technologies Inc.	341.64 Bn	311.89	87.69	0.24 Bn
4	PANW	Palo Alto Networks Inc	118.39 Bn	105.97	12.39	0.35 Bn
5	CRWD	CrowdStrike Holdings, Inc.	109.19 Bn	-347.56	23.92	0.82 Bn
6	SNPS	Synopsys Inc	76.22 Bn	57.21	10.80	14.29 Bn
7	FTNT	Fortinet, Inc.	62.40 Bn	33.30	9.52	1.00 Bn
8	NET	Cloudflare, Inc.	60.91 Bn	-591.17	30.25	3.50 Bn

Industry comparisons

Current Valuation	Value	Ind Avg
EV to Assets EV to Assets	0.50	2.36
EV to Cash from Ops. EV/CFO	8.07	6.76
EV to Debt EV to Debt	0.94	-7.44
EV to EBIT EV/EBIT	12.14	-6.97
EV to EBITDA EV/EBITDA	6.49	7.81
EV to Free Cash Flow [EV/FCF] EV/FCF	12.99	27.96
EV to Market Cap EV to Market Cap	1.20	0.43
EV to Revenue EV/Rev	1.16	32.94
Price to Book Value [P/B] P/B	2.24	3.89
Price to Earnings [P/E] P/E	22.00	-24.42

Dividend Metrics	Value	Ind Avg
Dividend Coverage Ratio Div Coverage (Qtr)	6.92	0.26
Dividend Payout Ratio % Div Payout % (Qtr)	0.00	2.68
Dividend per Basic Share Div per Share (Qtr)	0.00	0.10
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr)	0.00	1.68
Interest Coverage Int. cover (Qtr)	2.37	-11.97

Growth Metrics	Value	Ind Avg
Capex Growth (1y) % Capex 1y % (Qtr)	-29.92	-406.35
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr)	5.97	220.63
Dividend Growth (1y) % Dividend Growth (1y) %	0.00	-0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr)	268.79	19.33
EBITDA Growth (1y) % EBITDA 1y % (Qtr)	49.18	42.98
EBIT Growth (1y) % EBIT 1y % (Qtr)	440.28	13.70
EBT Growth (1y) % EBT 1y % (Qtr)	241.19	7.87
EPS Growth (1y) % EPS 1y % (Qtr)	30.16	68.92
FCF Growth (1y) % FCF 1y % (Qtr)	27.72	306.88
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr)	43.37	47.85

Liquidity Ratios	Value	Ind Avg
Asset Utilization Ratio Asset Util Ratio (Qtr)	0.43	0.67
Cash Payout Ratio Cash Payout (Qtr)	0.00	0.01
Cash Ratio Cash Ratio (Qtr)	0.77	1.21
Current Ratio Curr Ratio (Qtr)	1.38	2.59
Debt to Equity Ratio Debt/Equity (Qtr)	2.87	-0.95
Interest Cover Ratio Int Coverage (Qtr)	2.37	-11.97
Times Interest Earned Times Interest Earned (Qtr)	2.37	-11.97

Profitability	Value	Ind Avg
EBITDA Margin % EBITDA Margin % (Qtr)	19.40	-550.34
EBIT Margin % EBIT Margin % (Qtr)	9.52	-242.82
EBT Margin % EBT Margin % (Qtr)	5.50	-608.89
Gross Margin % Gross Margin % (Qtr)	32.60	51.79
Net Profit Margin % Net Margin % (Qtr)	4.40	-611.54

Research Tools

Shift4 Payments, Inc. (NYSE: FOUR)