PayPal Partner Nears Buy Point Ahead Of Earnings But Has To Clear This Level First

Shift4 payments (FOUR), today's IBD Growth Stocks to Watch selection, is consolidating and nearing a purchase point of 76.40. According to IBD MarketSmith's chart analysis, shares are finding support near the 50-day line in the base.

The stock is a growth stock with a Composite Rating of 90 and EPS Rating 82. The RS rating of 90 indicates the stock's superior performance compared to other stocks. The RS rating has also improved since five weeks ago. However, it's been a little lower recently.

Over the last seven quarters, sales growth has been consistent and ranged between 35% to 89%. In the first quarter of 2010, sales grew by 36%, to $547 millions. EPS was 51 cents and up 240%.

A Growth Stock Early Entry?

Shift4 Payments reported sales of $200 Million after network fees. After the results on May 5, shares rose in the base but met resistance around the 50-day level of 69 cents. Stock cleared its 50 day line in early July, and could be a good entry point as it tracks below this price level.

Earnings for the second quarter are due August 3. FactSet polled analysts who expect a second-quarter sales of $225 million after network fees and earnings per share at 52 cents.

Shift4 Payments offers payment processing tools. It offers software for money transactions to travel and hospitality, food, beverage, sports, entertainment and retail industries. Shift4 Payments was supporting around 50 enterprise merchants who process over $100 million in payments per year at the end of first quarter.

The company has three business segments: the payments platform offers card processing services and the technology solutions segment provides customer engagement tools. The company's partner-centric feature offers sales and marketing assistance.

FOUR listed on the stock market in June 2020 for $23 per share. Payment processing company, Harbortouch acquired it in 2018 and integrated it into its point-of sale system. In 2020, the company acquired 3dcart and rebranded 3dcart’s ecommerce platform to Shift4Shop. Platform features include a website creator, product management tools and marketing tools. Growth stock is a beneficiary of a partnership between PayPal and the growth stock for payments. This allows clients to integrate PayPal's shopping basket into their websites.

FOUR is the leader in credit card and payment processing.

Mutual funds hold 74% of the outstanding shares. Over the last six quarters, more funds have bought the stock. However, the Accumulation/Distribution Rating of D+ is less than optimal.

Invesco Discovery Funds (OPOCX), which holds shares in FOUR. The stock is also held by exchange traded funds. Fidelity Growth Opportunities ETF and First Trust Multi Cap Growth AlphaDEX ETF both hold shares in FOUR.