Shift4 Payments, Inc. (NYSE: FOUR)

Sector: Technology Industry: Software - Infrastructure CIK: 0001794669
Market Cap 4.63 Bn
P/B 2.77
P/E 27.19
P/S 1.19
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...

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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 3,563.59 Bn 33.97 12.13 60.56 Bn
2 ORCL Oracle Corp 561.87 Bn 36.43 9.21 124.39 Bn
3 PLTR Palantir Technologies Inc. 413.65 Bn 377.64 106.17 0.24 Bn
4 PANW Palo Alto Networks Inc 126.45 Bn 113.19 13.23 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 116.42 Bn -370.56 25.50 0.82 Bn
6 SNPS Synopsys Inc 86.06 Bn 64.60 12.20 14.29 Bn
7 NET Cloudflare, Inc. 62.78 Bn -609.27 31.18 3.50 Bn
8 FTNT Fortinet, Inc. 60.83 Bn 32.47 9.28 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.60 2.69
EV to Cash from Ops. EV/CFO 9.66 28.91
EV to Debt EV to Debt 1.12 19.83
EV to EBIT EV/EBIT 14.54 -9.95
EV to EBITDA EV/EBITDA 7.76 6.82
EV to Free Cash Flow [EV/FCF] EV/FCF 15.55 26.09
EV to Market Cap EV to Market Cap 1.16 0.36
EV to Revenue EV/Rev 1.38 -9.34
Price to Book Value [P/B] P/B 2.77 3.88
Price to Earnings [P/E] P/E 27.19 -10.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 6.92 -0.30
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.71
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 -14.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -29.92 -408.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 5.97 226.39
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 268.79 25.27
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 49.18 47.48
EBIT Growth (1y) % EBIT 1y % (Qtr) 440.28 20.13
EBT Growth (1y) % EBT 1y % (Qtr) 241.19 14.16
EPS Growth (1y) % EPS 1y % (Qtr) 30.16 67.50
FCF Growth (1y) % FCF 1y % (Qtr) 27.72 296.60
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 43.37 46.75
Liquidity Ratios Value Ind Avg Percentile
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 1.22
Current Ratio Curr Ratio (Qtr) 1.38 2.59
Debt to Equity Ratio Debt/Equity (Qtr) 2.87 -0.96
Interest Cover Ratio Int Coverage (Qtr) 2.37 -14.20
Times Interest Earned Times Interest Earned (Qtr) 2.37 -14.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 19.40 -548.16
EBIT Margin % EBIT Margin % (Qtr) 9.52 -199.84
EBT Margin % EBT Margin % (Qtr) 5.50 -607.20
Gross Margin % Gross Margin % (Qtr) 32.60 51.88
Net Profit Margin % Net Margin % (Qtr) 4.40 -610.00