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FleetCor: Why Acquisition Of FleetCor Could Be The Next Big Thing In Payments

Dec. 09, 2019 4:33 PM ETFLEETCOR Technologies, Inc. (FLT)1 Comment
Alexander Veytsman profile picture
Alexander Veytsman


  • Potential buyers of Fleetcor's business could include Visa, MasterCard, or American Express.
  • Fleetcor has a strong recurring revenue model, which strongly differentiates it among other co-branded companies.
  • Valuation is not cheap, but we believe that longer term a potential deal could be highly synergistic.

Basic Business:

Fleetcor is a global provider of workforce payment products, offering fuel card payment solutions in both North American and international markets. Fleetcor also offers lodging, corporate payment, toll products, and gift cards, among other solutions. In addition, the company provides fleet-related and workforce payment products, such as employment benefits and mobile telematics. Fleetcor operates a close-loop network that allows customers (e.g., truck drivers) to take advantage of co-branded cards that give them special discounts on the price of gas, as well as on relevant car-related products at gas stations and convenience stores. Further, the company engages in issuing and processing data, enabling routing, authorization, and settlement of transactions. Fleetcor largely earns its revenue on a per transaction basis, particularly for credit cards and gift cards. Overall, Fleetcor’s annual revenue base is around $2.8 billion and its market cap is approximately $26 billion.


When we compare Fleetcor against its peers in the payments industry, such as GPN, ADS, FISV, and FIS, we continue to estimate that FLT merits a P/E multiple of 27x (up from 26x) on 2020 earnings. When we apply this multiple to our 2020 revised EPS estimate of $12.80 (up from $12.75), we reach a target price of $346 (up from $331).

Why Acquisition of Fleetcor Makes Sense:

Potential Buyers: First things first: we have to identify potential buyers. Since we are talking about a $26 billion market cap company, the buyers have to come from the large cap conglomerate on the payments side, namely Visa, MasterCard, or American Express. They have the capabilities and they have prospective synergies. Most importantly, none of those three did a mega deal in a long time. In our view, co-branded card networks would greatly diversify the platform of any of these three mega-networks, while at the same time FLT's business itself has a lot of relevance to them. Those same reasons that

This article was written by

Alexander Veytsman profile picture
Alexander Veytsman's areas of expertise are long/short equities, as well as the macroeconomic trends of the US economy. Opinions expressed in the published articles are exclusively his own, and not affiliated with any company.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (1)

Wait 1 minute. Isn't USBank the number 1 competitor to FLT? Where are they in this mix .... I am USB retired. This is/was a huge part of our revenue.
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