Digital payment solutions provider FleetCor Technologies, Inc. (FLT) offers its solutions through two categories, Corporate Payments solutions and Expense Management solutions. Last year, the company also extended its lodging business into the insurance vertical via its acquisition of ALE Solutions, Inc., a leader in lodging solutions to the insurance industry.

FLT reported solid third-quarter 2021 results, with earnings and revenues surpassing the consensus estimates. The company's revenues came in at $755.48 million, indicating an increase of 29% year-over-year, outpacing the analysts' expectations by $16.01 million. Also, its adjusted EPS increased 25% from the year-ago value to $3.52, surpassing the consensus estimate by 1.1%. However, net cash provided by operating activities declined 50.6% year-over-year in the nine months ended September 30.

FLT shares have declined 18% over the past year and 12.6% over the past six months. The stock is currently trading below its 50-day and 200-day moving average, indicating a downtrend. Over the past six months, the stock has slumped 12.6% to close its last trading session at $223.84. FLT hit its 52-week low on December 1, 2021. The company has been experiencing waning investors' interest as the pandemic-led digital adoption, and hyper-demand for digital payment solutions have declined over the past months. Investors have been unloading previously top-performing FinTech brands along with a broader selloff of tech stocks in general; the Wall Street Journal reported last month.

Here's what could shape FLT's performance in the near term:

Higher-Than-Industry Profit Margins

FLT's gross profit margin of 80.75% is 63.4% lower than the industry average of 49.42%. Also, its net income margin of 31.12% is 386.2% higher than the industry average of 6.40%.

Moreover, FLT's ROE, ROA, and ROTC of 26.97%, 6.13%, and 9.15% compare with the industry averages of 8.29%, 3.62%, and 4.99%, respectively.

Mixed Valuation

In terms of forward P/E, FLT is currently trading at 22.32x, 26.6% lower than the industry average of 30.39x. Also, its forward Price/Cash Flow ratio of 19.06 is 21.2% lower than the industry average of 24.18.

However, FLT's forward EV/Sales is 91.4% higher than the industry average of 4.22x, and its trailing-12-month PEG is 169.9% higher than the industry average of 0.52x.

Consensus Price Target Indicates Potential Upside

Of the seven Wall Street analysts that have rated the stock, two rated it Buy, and five rated it Hold. The median price target of $283.43 indicates a potential upside of 25.6% from its last closing price. Their price targets range from a low of $255 to a high of $304.

POWR Ratings Reflect Uncertainty

FLT has an overall rating of C, translating to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a grade of C for Value, consistent with its mixed valuation.

FLT also has a C grade for Stability, in sync with its 60-month beta of 1.13.

Of the 123 stocks in the D-rated Financial Services (Enterprise) industry, FLT is ranked #39.

Beyond what I have stated above, you can also view FLT's grades for Quality, Growth, Momentum, and Sentiment here.

Bottom Line

The company's momentum has been weak over the past year, despite its financial growth, strategic acquisitions, and enhancement in its offerings. Moreover, the stock is relatively volatile, with more than one beta. Also, considering its modestly high valuations, it could be wise to wait for its prospects to stabilize before investing in the stock.

How Does FLEETCOR Technologies, Inc. (FLT) Stack Up Against its Peers?

While FLT has an overall POWR Rating of C, you might want to consider looking at its industry peers, Accenture (ACN), Infosys (INFY), and Wipro (WIT), which have a B (Buy) rating.

FLT shares were trading at $231.64 per share on Monday afternoon, up $7.80 (+3.48%). Year-to-date, FLT has declined -15.10%, versus a 29.22% rise in the benchmark S&P 500 index during the same period.

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.

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