Stock on Fire – S1 Corp. jumps on $540 Million Bid
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    Stock Alert for S1 Corp. (SONE)

    S1 Corp. (SONE) is a global provider of payments and financial services software solutions. It offers payments solutions for automated teller machines (ATM) and retail point-of-sale (POS) driving, card management, and merchant acquiring, as well as financial services solutions for consumer, small business and corporate online banking, trade finance, mobile banking, voice banking, branch and call center banking. The Company sells its solutions primarily to banks, credit unions, retailers and transaction processors. SONE also provides software, custom software development, hosting and other services to State Farm Mutual Automobile Insurance Company, a relationship that it expects will conclude by the end of 2011. The Company operates in three segments: Banking: Payments, Banking: Large Financial Institution (FI), and Community Financial Institution (FI).

    Share Statistics (27-July-11)   FY

    2009

    FY

    2010

    %

    Chg

    Q1

    2010

    Q1

    2011

    %

    Chg

    Symbol SONE Revenue, $Mn 238.93 209.09 -12.5% 51.16 57.84 13.1%
    Current price $9.27 Gross marg. 55.8% 46.1% -17.4% 48.3% 46.3% -4.1%
    52wk Range: $4.73-$9.43 Oper. margin -2.2% 2.5%
    Avg Vol (3m): 1,008,000 Net margin 12.7% -3.0% -123.6% -2.1% 1.2% -157.1%
    Market Cap. 495.37M              
    Shares Outstanding 53.44M EPS, $ 0.55 -0.12 -121.8% -0.02 0.01 -150.0%

    Source: Reuters.com, SEC Filings.

    Recent News

    SONE shares rose as much as 0.86% yesterday, extending Tuesday’s strong gains, after the Norcross, Georgia-based financial-services software provider received an offer to be acquired for $540 million by peer ACI Worldwide Inc. (NASDAQ: ACIW).  New York-based ACI, which provides software for electronic payment systems, offered to purchase all outstanding shares of SONE for $9.50 per share in a cash and stock transaction, a 33% premium from where SONE stock closed Monday.

    Under the ACI proposal, SONE shareholders can choose to receive cash and/or stock for their shares, with consideration consisting of 40% in ACI stock and 60% in cash.  Once the deal is completed, SONE shareholders would hold 15% of the combined company and ACI shareholders would own the rest. ACI presented its proposal in the form of a letter to S1’s board and believes it constitutes a superior offer under the terms of SONE’s pending merger agreement with Israel’s Fundtech, which was announced last month.

    SONE stated that its board will review the terms of the proposal in a manner consistent with its obligations under the merger agreement with Fundtech and applicable Delaware law.

    SONE shares on Tuesday set a fresh 52-week high of $9.43, as trading volume rocketed to 33.40 million shares. The stock is currently above its 50-day moving average of $7.40 and above its 200-day moving average of $6.89.

    Financial Summary

    For the first quarter ended March 31, 2011, SONE realized total revenue of $57.8 million, a 13% increase over the prior-year quarter’s $51.2 million.  The increase is attributable to growth in software licenses revenue across all segments, higher professional services revenue in its Payments and Banking: Large FI segments, and higher hosting revenue in its Banking: Community FI segment primarily due to the PM Systems acquisition in March 2010.

    The Company reported U.S. GAAP net income of $0.7 million, or $0.01 per share, in the first quarter of 2011, compared with U.S. GAAP net loss of $1.1 million, or ($0.02) per share, in the first quarter of 2010. These figures include stock-based compensation expense of $0.8 million and $0.4 million in the first quarter of 2011 and 2010, respectively.

    Adjusted EBITDA for the quarter came in at $5.1 million, an increase of 82% from $2.8 million reported in the first quarter of 2010.

    Financial Strength (27-July-2011)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 2.29 2.10 0.65
    Current Ratio (MRQ) 1.74 2.86 2.62 1.02
    LT Debt to Equity (MRQ) 0.00 12.78 14.35 123.18
    Total Debt to Equity (MRQ) 0.02 19.14 24.39 161.58
    Interest Coverage (TTM) 74.54 0.85 0.94 19.0

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    This is the consensus forecast among eight polled investment analysts. Against the S1 Corp company.

    Analyst Detail

    Buy

    Outperform

    Hold

    Underperform

    Sell

    No Opinion

    Latest 3 2 3 0 0 1
    4 weeks ago 3 1 4 0 0 1
    2 months ago 3 1 4 0 0 1
    3 months ago 1 1 5 0 0 1
    Last year 2 1 3 0 0 1

    The six analysts offering 12-month price targets for SONE have a median target of 9.00, with a high estimate of 13.00 and a low estimate of 7.50. The median estimate represents a 26.23% increase from the last price of 7.13.

    Source: markets.ft.com

    Consensus Estimates Analysis

    # of Estimates

    Mean

    High

    Low

    1 Year Ago

    SALES (in millions)
    Quarter Ending Sep-11 4 59.48 60.56 58.38 63.45
    Quarter Ending Dec-11 4 61.42 63.65 59.31 65.05
    Year Ending Dec-11 6 236.43 238.78 233.00 251.99
    Year Ending Dec-12 6 247.79 261.93 239.00
    EARNINGS (per share)
    Quarter Ending Sep-11 7 0.05 0.07 0.03 0.12
    Quarter Ending Dec-11 7 0.07 0.09 0.04 0.14
    Year Ending Dec-11 7 0.17 0.25 0.11 0.43
    Year Ending Dec-12 7 0.32 0.39 0.21
    LT Growth Rate (%) 4 10.62 15.00 5.00 8.75

    Technical Analysis

     

    Source: http://stockcharts.com

    SONE’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility.

    The MACD for SONE currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0 which implies that the underlying moving averages are trending higher.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    July27-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Fiserv Inc. FISV 62.12 8.92B 13.71 12.25 2.08 2.00
    ACI Worldwide Inc. ACIW 37.34 1.25B 31.91 24.89 2.76 2.57
    Fidelity National Information Services FIS 30.06 9.19B 13.01 11.52 1.59 1.50
    Intuit Inc. INTU 47.53 14.45B 18.94 16.74 3.76 3.44
    Business Software & Services Median       22.83 n/a 2.24 n/a
    S1 Corp. SONE 9.28 495.64M 66.29 34.37 2.10 2.00

    Source: Thomson Financial

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